We have criticized the Lancaster Newspapers, Inc. in the past for running misleading advertisements on its front page. We credit them for having responded in a responsible manner.
So it is with some shock this morning when we see a multi-colored advertisement ostensibly offering 9.86% APT on “Clean Energy Bonds.”
We don’t know anything about this particular offer, other than the tiny blurred print at the bottom which requires a magnifying glass and even then is hard to read. Presumably the offer is limited to persons of some means. But since when does one need to mass advertise in order to reach such persons? Or are they seeking people of means who are unsophisticated (in other words ‘suckers’) and thus are not likely to go to the usual sources for financial information?
Currently a ten year Treasury Bill pays a return of 2.75%.
The average rate on a 15 year mortgage is 3.61%.
The so called “prime rate” as currently reported by the Wall Street Journal is 3.25%. That is the rate that banks will lend to valued customers. Excellent customers probably can borrow for a bit less.
Average returns on BBB rated corporate bonds currently is about 3.65%, and BBB runs significant risk.
One has to drop down to CCC, below “Investment grade” and a hair breadth above “junk bonds” to find rates of 9%.
When it comes to CCC and junk rated bonds, one might do as well shooting craps in Atlantic City.
We are not commenting on the merit or lack thereof of the Clean Energy offering. Our concern is whether LNP checks that the source is of good repute and the offer legitimate.
When one owns the largest megaphone in town, we think it should be handled responsibly.
That’s an interesting question and while you would assume that the answer is yes…you would also assume that they have a responsibility to practice legitimate journalism which the do not so all bets are off.