Can’t Get a Loan? Issue a Bond!

There is an interesting article in the 9/18 edition of the Wall Street Journal about small and medium sized businesses issuing bonds in Germany. The bonds carry a coupon rate of about 7%, much higher than government debt, and apparently comprise 23% of the debt market in Germany. The companies are issuing the debt because German banks are decreasing their loans to German companies.

We think this is a clever idea, and could be used in the United States. To be sure, the German companies were all around $175 milllion in sales,  so they’re not exactly small by our definition.

The companies issuing the bonds have all sorts of ways of promoting the bonds….bread wrappers, signs in their retail locations. No mention of web site promotions.

Maybe kickstarter could get into the act!

We don’t know of state regulations that would prohibit such issues. We think, if someone were to try it, it would be a good idea to write a prospectus describing the business and the chances of repayment.

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