The Charities Aid Foundation has announced plans to launch a retail charity bond on the London Stock Exchange.

The bond will pay 5 per cent a year until 2026, and will be issued by Retail Charity Bonds PLC. Funds raised will be loaned, via a loan agreement, to CAF.

CAF has not said how much it hopes to raise, but other similar bonds have targeted in the region of £10m to £20m.

It is the third bond to be issued through the Retail Charity Bonds platform, which was created by Allia as an issuing vehicle to enable UK charities to raise medium debt finance through bonds issued to retail and wholesale investors.

The bonds are available to wholesale and retail investors, and will pay a fixed rate of interest of 5 per cent per annum, payable twice yearly in April and October, for ten years.

At any time during the bond’s lifetime, investors are permitted to sell them (within market hours and in normal market conditions) on the open market through their stockbroker. Canaccord Genuity Ltd is acting as lead manager on the issue.

John Low, Chief Executive of CAF, said: “CAF has a 90 year record supporting civil society by helping people to support charities safely and effectively and helping charities make the most efficient use of their money. The funds raised from this Retail Charity Bond will enable us to further our work in a variety of ways, including expanding services for donors and for charities through CAF Bank.”

The bonds have a minimum initial subscription amount of £500 and are available in multiples of £100 thereafter. The offer period is expected to close at 12 noon on 6 April.

The bonds are expected to be listed on the London Stock Exchange, through the electronic Order book for Retail Bonds.