Alliance and Leicester launches new bond

13 September 2005
Alliance and Leicester International Limited (ALIL) has launched a new limited edition one-year fixed rate bond.

The bond has an interest rate of 4.4 per cent – new and existing customers can invest with a minimum deposit of £5,000 and a maximum deposit of £1 million. It was launched after the success of a similar bond which came out last year.

Managing director of ALIL, Simon Hull, said: "The 1 Year Fixed Rate Bond gives savers the security of a fixed and highly competitive rate but with the option of assessing the market again for the best deal in 12 months' time."

Natwest launched a similar product last month after their savings bond, launched in July, was sold out.

However, some warn against taking out bonds at times of economic uncertainty.

Head of strategy at F&N, Paul Niven, said: "With a guaranteed nominal return (before the effects of inflation) of only around four per cent in the US, 4.2 per cent in the UK and 3.1 per cent in Germany, over the next ten years, we are bearish on fixed income. In a world of low returns timing investment decisions become key.

"The long run backdrop of low interest rates and muted growth and inflation may well continue to prove supportive for fixed income but, right now, bonds are a sell."

To read more about Investment Bonds, click here.

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