SPECIAL REPORT: RETAIL CURRENCY BONDS

The changing nature of the retail investor Retail investors have traditionally been the mainstay of the Euromarkets. For issuers, selling bonds to continental retail -- whether to generate spread tightening or to tap arbitrage in higher yielding markets -- has long been a key element of funding strategies. In recent years, the nature of retail has undergone some fundamental changes. Falling returns in traditional retail markets -- such as higher yielding western European currencies and the dollar bloc -- means they are now being challenged by a new breed of even higher yielding currencies such as the South African rand and the Czech koruna. The extent of the change means that even these markets -- only three years old -- are no longer considered exotic. The more daring investor might now buy Israeli shekel or Turkish lira bonds, for example. Taken together with the increasing mutualisation of retail investment, these new niche currency sectors are increasingly dominated by a handful of firms. Euan Hagger reports.