DIY investors are waiting for thousands of pounds in late payments from the £50m retail bond still for sale at Hargreaves Lansdown.
Depositors will receive a promise of 6.5 per cent annual interest and that they will get all their money back this year when Bollywood production company Eros Media World launched a £50 million individual bond on the London Stock Exchange nine years ago. Attracted by the warranty.
Adem Demir, speaking under a pseudonym, invested thousands of pounds from his pension in Eros bonds. “Eros is a very well-known film producer and established business in India. We know that retail bonds are risky, but they are such a well-known company that there was no reason not to trust them.” he said.
But Mr Demir was out of thousands of pounds in his pocket after the company failed to make a payment due in October. He should have received 8.5% interest after restructuring pushed bond yields higher in 2021. Higher yields usually indicate a higher risk of default.
Eros blamed the delay on “administrative issues” after the internal split. The company promised in November that he would resolve the matter as soon as possible, but months later bondholders awaiting funding were silenced by the company.
“I would never have bought it if I hadn’t seen it at Hargreaves Lansdowne,” Demiah added. , I fear they will buy without considering the ever-increasing risk of default.” The bond was also able to be traded through rival broker Interactive Investor.
Unlike bank deposits, retail bonds are not covered by the Financial Services Compensation Scheme. This means that bondholders are likely to lose money if the issuer fails.
Unlike “mini bonds”, retail bonds can be traded on exchanges. Eros bonds are currently trading at around £9 from the £100 listing.
The Financial Conduct Authority declined to comment, but it is understood that the city’s watchdog is aware of the issue.
Eros Media did not respond to a request for comment. Hargreaves Lansdowne declined to comment.
A spokeswoman for Interactive Investor said the bond was considered a “complex product” and investors were asked to test it before trading to ensure suitability.
The platform said that non-payment of interest or dividends does not block transactions, but that it has reached out to the company but has received no further information.
