The ‘simple’ corporate bonds accessible to DIY investors

The bond market can at times seem rife with complexity. But with efforts under way to make corporate bonds more accessible to DIY investors, measures have been taken to simplify things.

One element of this is the introduction of the “plain vanilla listed bond” (PVLB) tag. This is a label that companies issuing bonds can apply if they meet specific criteria to provide simplicity and transparency. It accompanies the lowering of minimum investment amounts on such bonds to make them more accessible to DIY investors.

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As an explainer from the London Stock Exchange Group puts it, these bonds tend to have “straightforward structures”, making them easier for investors to understand.

They would likely be issued by FTSE 100 companies, come with either fixed or floating rate interest payments, and avoid the complexities of other instruments.

That means they wouldn’t, for example, have a “convertible” element (convertible bonds can be exchanged for equities in the same company, in certain circumstances), that they wouldn’t be an asset-backed security and wouldn’t have interest payments linked to another asset or index.

As with other bonds, the investor receives an interest payment at a stated percentage of its value, as reflected in the yield at the time of purchase. They receive their capital when the bond matures, provided the issuer has not defaulted.

Investment-grade corporate bonds, or those issued by companies that have higher credit ratings, are seen as less likely to default on their debt. They are, however, riskier than developed market government bonds (such as UK gilts and US T-bills), and therefore come with a bigger yield.

However, they share many of the traits of government bonds. They can often be fairly stable and defensive but are sensitive to moves in interest rates.

The average fund in the Investment Association’s (IA) Sterling Corporate Bond sector (containing portfolios of investment-grade bonds) is up by 0.2% for the 12 months to 3 November 2026, versus a 0.5% loss for the IA UK Gilts sector.

As you can see on our bonds page, a bond that is available should list the name of the issuing company, the yield, the price and the date on which it matures. Yields move inversely to prices once a bond trades on the secondary market.

Corporate bonds for DIY investors

With yields on UK government bonds (gilts) having risen markedly since 2022, many DIY investors have taken to buying them directly.

Individuals can lock in a return based on the yield, provided they hold the instrument to maturity and the issuer doesn’t default on its debt.

An added bonus has come in the form of tax efficiency, given that those holding gilts directly don’t have to pay capital gains tax (CGT), even if they are held outside tax wrappers like ISAs.

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There are now industry efforts to replicate this success story in the corporate bond space, aided by a shake-up of Financial Conduct Authority (FCA) rules that reduces the administrative burden for companies issuing corporate bonds that come with lower “denominations”, or minimum investment amounts. These will drop from the old minimum of £100,000 to as little as £1.

As with buying shares directly rather than using funds, investors should remember to diversify adequately and to do their research on the relevant companies.

Initial price talk detail

Initial price talk is expressed as a credit spread (X) over a relevant gilt yield (Y). The credit spread is the additional yield that investors want over and above the yield on the relevant gilt. For example, the price talk on a five-year bond might be Gilts plus 60 basis points (X). If the gilt yield (Y) is 5% then the approximate yield is 5.60% (X+Y).

During the bookbuild, the credit spread will tend to be adjusted to demand (usually downwards in a well-sought-after deal). Gilt yields also change during the day. The issuer will set the exact yield, coupon and price later in the day.