Savings Product Review: Compass Secured Bonds

Tuesday 13th June 2006

What is it called and what sort of savings product is it?
Compass Secured Bonds are a fixed interest debt security

Who is the company behind it?
Compass Capital is a newly created company which is related to finance company Bridgecorp.

Who is the target market?
These bonds suit people who want a fixed return and are prepared to take on some risk.

What return does it offer?
Currently it is offering rates between 8.00% and 8.50%.

When was it launched?
Friday May 26.

What other products is it like or is it competing with?
These bonds are in the crowded finance company secured debenture sectors, but they have a difference as explained in the unique selling points.

Is it long term, short term or medium term?
Compass is offering bonds with terms ranging from one year to three years.

What is the unique selling point?
Two key selling points are that the underlying loans in the bond portfolios cannot exceed a loan-to-valuation ratio of 66.67% which is on the conservative side. Also repayment of the principal amount of each loan is 100% insured by certain syndicates at Lloyd's of London.

How strong a stomach do you need for it?
While the money being raised is being used to fund property development, investors can take some comfort that their principal is 100% insured with Lloyds.

What's the hitch?
The biggest risks are lack of liquidity and the risks associated with lending in the property sector.

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