New Chocolate Bonds Offer Sweet Payout

Submitted by Chris Gaetano on Thu, 05/27/2010 - 16:44

A British confectioner is seeking approval to issue £5 million worth of bonds that would yield not bland, crumply money but sweet, delicious chocolate. The company, Hotel Chocolat, is currently seeking approval from British financial regulators to go through with this plan, helped along with the aid of firm BDO. The confectioner came up with the idea because, though it needs financing to expand, it is too small of a company to quality for a traditional bond issue.

Should the idea go through, bondholders would be able to invest either £2,000 or £4,000 for a three-year bond that is expected to produce an annual yield of 6.72 percent for the £2,000 bond or 7.29 percent for the £4,000 bond. When the bond matures, investors, gleaned from members of the company’s Tasting Club, will be paid in boxes of chocolate.

Are we seeing the birth of a new chocolate bubble? What derivative products will this new type of security yield? Must we guard against Ponzi schemes that say they’re paying out chocolate but instead yield imitation cocoa powder? Only time will tell.

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