ICAP Targets Retail Investors for Its First Bonds in 3 Years

ICAP Plc (IAP), the world’s largest broker of transactions between banks, is targeting individual investors for its first bond sale in three years.

The six-year senior, unsecured bonds in pounds will pay a coupon of 5.5 percent, the London-based broker said in a statement. It’s the London-based broker’s first bonds denominated in pounds, data compiled by Bloomberg show.

The yield on ICAP’s bonds in euros are near a nine-month low as it cuts costs to counter a drop in trading volume stemming from Europe’s debt crisis. The broker’s full-year pretax profit will be in the middle of the 335 million-pound ($518 million) to 365 million-pound range of analyst estimates, ICAP said yesterday.

“They’re a scarce issuer, I think the sale will offer value and do very well,” said Louis Gargour, chief investment officer at LNG Capital LLP, a London-based hedge fund. “It’s a very well-known organization with very little existing debt.”

ICAP, which is rated Baa2 by Moody’s Investors Service and BBB+ by Fitch, has the equivalent of $558 million of bonds outstanding, including a 300 million-euro ($365 million) offering in 2009 and $193 million of notes due 2015 placed privately in 2005, according to data compiled by Bloomberg.

ICAP officials in London weren’t immediately available to comment.

Falling Yield

Interdealer brokers such as ICAP act as a go-between for banks that trade bonds, stocks, currencies, energy and derivatives. They profit when prices fluctuate because more traders use the products they trade.

The yield on ICAP’s 7.5 percent bonds in euros due 2014 has fallen to 4.6 percent from 6.3 percent at the start of the year, data compiled by Bloomberg show. That compares with 9.3 percent for similarly rated companies in Bank of America Merrill Lynch’s Sterling Corporates, Financials, BBB Rated Index.

Lloyds Bank Plc and Royal Bank of Scotland Group Plc are managing the sale. Books will remain open until July 24, a person with knowledge of the details said.

ICAP’s bonds will be offered in minimum denominations of 1,000 pounds, which are deemed to be within reach of retail buyers. Bonds sold in the U.K. tend to target institutional investors, and are usually issued in minimum pieces of 50,000 pounds.

To contact the reporter on this story: Hannah Benjamin in London at hbenjamin1@bloomberg.net

To contact the editor responsible for this story: Paul Armstrong at parmstrong10@bloomberg.net

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