Page last updated at 09:46 GMT, Friday, 16 April 2010 10:46 UK

Thomas Cook raises 650m through first bond issue

Thomas Cook shop sign
Thomas Cook has turned to the bond market for the first time

Travel firm Thomas Cook has borrowed £650m with its first foray into the bond markets.

The company issued two bonds - a £300m seven-year bond paying 7.75% interest, and a 400m euros (£350m) five-year bond paying 6.75%.

This is the first time Thomas Cook has turned to the bond market for money, having previous relied on bank loans.

"This transaction strengthens our financial position by diversifying our funding," the company said.

Bonds are a type of debt, like loans, but the money borrowed comes from investors such as pension funds and mutual funds instead of banks. Like shares, bonds can be traded by investors.

Thomas Cook promised investors to get two ratings before its first interest payment in April 2011.

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