Joinvest Co Ltd (湊伙) yesterday said it would launch a financial technology service next week that enables retail investors to buy foreign bonds via group buying with an entry threshold of just US$10, making investing in bonds accessible to those with limited budgets.
Joinvest’s new service was approved by the Financial Supervisory Commission (FSC) last month as a regulatory sandbox experiment lasting one year, with total investment limited to NT$200 million (US$7.02 million), company founder Lin Wei (林蔚) told a news conference in Taipei.
“Investment in foreign corporate bonds has many advantages, as it generates decent returns, and is safer than investing in stocks or funds. But it has a high threshold, as investors typically must order a minimum of US$10,000,” Lin said.
Photo: CNA
As the US$10,000 threshold has made it difficult for small investors to tap the market, Joinvest decided to provide a fintech service that helps investors connect with each other so that they can buy foreign bonds via collective buying, he said.
Joinvest has selected secondary market bonds issued by Warner Media LLC, Air Lease Co, National Australia Bank Ltd and Walt Disney Co, which have yields of 1.3 to 3.7 percent and mature in 2027 to 2032, Lin said.
They are all investment-grade bonds, with ratings of “A-minus,” as Joinvest aims to provide safe targets for retail investors, Lin said, adding that only 0.1 percent of bonds with ratings of A-minus have defaulted over the past 20 years.
The platform would allow people to choose which bonds to invest in and the amount to invest, and when enough investors chose a bond, Joinvest would finish the deal via foreign brokerages, using a trust account that it has set up at First Commercial Bank (第一銀行), Lin said.
To provide investors with liquidity, Joinvest would allow investors to sell their position to other investors on the platform before the bonds mature, he said.
“Investing in foreign bonds could be a better alternative than fixed deposits, as the interest rates of fixed deposits at local banks are too low,” Lin said.
The service would be the world’s first legitimate service that allows investors to buy a financial target via group buying, he said.
Joinvest would also look for qualified local bonds, but given low local interest rates, few corporate bonds have good yield rates, Lin said.
Each investor can invest a maximum of NT$250,000 on the platform, as Joinvest is required by the FSC to register at least 500 investors and finish three bond deals within one year, Lin said.
Joinvest is a Taipei-based start-up that began operation in May 2018, with paid-in capital of NT$4 million, but, to comply with an FSC request, the firm plans to raise money so that it can boost its paid-in capital to NT$14 million by the end of this year, he said.
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