New 7% bond to appeal to income seekers

The new Provident Financial Corporate Bond offers a generous 7% a year. UK investors can now apply for the Bond online through The Share Centre until 8am on 9 April 2010.

Explaining the benefits and some of the risks associated with the new Bond, Guy Knight, director at The Share Centre, said: "The Provident Financial Bond is certainly an attractive offer for income seekers. It aims to pay an annual income of £70 for 10 years for every £1,000 invested and then return the original investment on maturity.

"This compares handsomely with some cash ISAs offered by banks that aim to draw investors in with high interests for a year, only to reduce the rate to 0.5% thereafter. However, investors should note that as with other investments, if Provident Financial were to run into financial difficulty and default on the Bond, they could lose some or all of their investment and future income.

"If they decide to sell the Bond during the 10 year term investors might also get back less than they originally invested. Inflation would of course reduce the real value of the investment and therefore what can be bought with it in the future. Also, it's worth remembering that Corporate Bonds are not covered by the Financial Services Compensation Scheme."

To help investors better understand the offer, The Share Centre has complied a list of the main risks and rewards associated with the Bond as well as some key dates concerning the offer process.

WHY INVEST?

7% income fixed for the next 10 years
Initial investment returned after 10 years
Tax free returns if invested through an ISA or SIPP
Easy to invest by online application

ASSOCIATED RISKS

Investors could lose some or all of their investment and future income earned
Corporate Bonds are not covered by the Financial Services Compensation Scheme
If you sell the Bond during the 10 year term you might get back less than you originally invested
Inflation would reduce the real value and therefore what you could buy with your investment in the future

KEY DATES

Offer open: 22 March 2010
Offer close: 12 April 2010 (9 April 2010 via The Share Centre)
Allocations announced: prior to 15 April 2010
Shares allocated: 15 April 2010
Trading begins: 15 April 2010