They are backed by insurance companies that have committed to pay full principal (but no interest) in the event of default, said Reginald McNaughton, president of First Equity Finance, which advised the firms on their financings.

McNaughton said the insurance firms are rated no less than BB-plus, implying a BB-plus rating for the bonds.

McNaughton said the deals were in the "bond-issuing phase" but it is a long phase - the deal will take another six weeks, he said, in which time First Equity will line up distribution for the transaction.

He said that insurance firms have committed to backing the deal, and that an accounting firm had done due diligence on the issuers.

McNaughton would not disclose the names of the insurance companies or the accounting firm.

An 8 per cent yield for a BB-plus bond should prove attractive to individual investors, who will be included in the marketing for the offer.

The yield was described as "too good to be true" by Matthew Bate, an independent financial adviser for advisory Private Capital.

McNaughton did not give much detail on how the bonds will be distributed, saying simply that they will be sold through "brokerages".

"We deal with brokerage companies [who] may place it with high-net-worth clients ... we don't care," he said.

The bonds and First Equity are unregulated. The instrument in that sense bears resemblance to wealth management products sold on the mainland, which are typically sold unregulated to individuals, often as project financings for companies that cannot get funding otherwise.