In this review of ZP Secured Direct Lending bonds, we’ll see the investment option’s features and terms, as well as the pros and cons of such investments.
ZP Secured Direct Lending PLC, the issuer of the bonds, is a lending sector firm headquartered in London, UK. The company targets attractive and regular returns through investments in a diversified portfolio of secured debt instruments of UK small and medium-sized enterprises.
Property, equipment, and accounts receivable are some examples of assets that might serve as collateral for loans that ZP takes out.
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If you have this in your portfolio, it makes sense to have a portfolio review, as the investment isn’t suitable for everybody.
ZP Secured Direct Lending Bonds Terms and Features
ZP 8% Senior Secured Bonds Due 2024
Professional investors can receive a fixed quarterly coupon payment on the ZP Secured Direct Lending 8% senior secured bond, which matures in September 2024.
The investment opportunity is worth up to 150 million, denominated in British pounds and US dollars.
These bonds are listed on the Euronext Dublin Exchange and investors can easily transfer them. They are accepted by UCITS, ISA, SIPP, SSAS, QROPS, portfolio bonds, and other investment platforms.
The ZP Secured Direct Lending bonds were issued in September 2019.
The bond is part of ZP Secured Direct Lending PLC’s secured medium term note program worth 500 million pounds.
ZP 7.25% Fixed Rate Bonds Due 2026
ZP also offers secured bonds worth up to 50 million pounds that has a fixed coupon rate of 7.25%. This offering, issued on December 23, 2021, will mature on the same date in 2026.
The ZP Secured Direct Lending bonds are listed on the Vienna MTF for trading.
Each bond unit bears a face value of 500,000 pounds. Investors can only buy or sell the bond in multiples of 1,000 pounds.
The bonds are also part of ZP Secured Direct Lending PLC’s secured medium term note program.
Pros and cons of secured fixed rate bonds
Advantages of Secured Fixed Rate Bonds
- When an issuer defaults, secured fixed-rate bonds protect bondholders against failure by being backed by certain assets.
- Risk is relatively lower with these bonds compared to unsecured bonds because investors have priority over collateralized assets in case of default.
- Coupon payments give investors a steady and established income.
- Adding secured fixed-rate bonds to a diversified investment strategy can lower risk and provide stability, especially when the market is unstable.
Disadvantages of Secured Fixed Rate Bonds
- People who buy fixed-rate bonds might not be able to get good results if inflation or interest rates go up. This could cause bond prices to drop.
- The borrower may not be able to pay back its due plus interest. This is called credit failure.
- If inflation goes up faster than the bond’s return, the set interest payments may lose value over time.
Final Thoughts on ZP Secured Direct Lending Bonds
Listed on an exchange, these bonds provide liquidity, interest payments that are predictable, and explicit collateral backing.
Besides, the fact that ZP Secured Direct Lending PLC remains active means it continues as a going concern and does not have pending plans to liquidate its assets, so it can fulfill its financial obligations.
Nevertheless, do exercise caution and execute necessary due diligence as past performance doesn’t mean all will always be well going forward.
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