Adrian Rossiter, a consultant from London, invested thousands of pounds in a retail bond issued by Wasps, the rugby union club, in 2015, lured by the promise of 6.5pc annual interest and the guarantee that he would get all his money back in 2022.
Seven years later, Mr Rossiter’s cash is trapped in a bond that has vanished from the market.
Wasps – six-time Premiership champions – raised £35m from DIY investors in 2015 to buy a stadium, the Coventry Building Society Arena, after relocating to the city from London in 2014. Unlike “mini” bonds, retail bonds are tradeable on the stock market.
But the bond was suspended from the London Stock Exchange this May, after the club announced on its last day of trading that it would not be able to meet its repayments.
Mr Rossiter was left out-of-pocket and enraged. “I was absolutely furious that Wasps waited until the bond’s maturity date to say they could not give us back our money,” he said. “It is totally inexcusable for [the issuer of] a seven-year bond to wait until its last day of trading.”
Wasps is pursuing a refinancing agreement with HSBC, but investors have grown anxious that the bond is hurtling towards a default.
Last week, the rugby club served a “notice in the event of default”, informing investors that it hoped to agree to refinancing terms with HSBC by August 13. It said it would update bondholders no later than July 29.
However, bond experts have warned that if Wasps fails to secure an agreement, it would be the first ever retail bond to default after being listed on the stock exchange.
Kim Barrett, a financial adviser, said savers should be wary of investing in individual bonds from relatively small businesses such as Wasps, which typically came with a higher level of risk.
A spokesman for Wasps said investors would keep getting 6.5pc interest payments until the bond is repaid, including beyond the maturity date.
He said: “Wasps continues to work towards completing its refinancing and the redemption of the bonds on, or before, August 12 2022.”