Over the past few weeks the primary market has seen a flurry of activity with 5 different issuers coming to market. These securities are all different in structure, credit risk and trading terms. At BondAdviser we keep a close eye on the factors driving issuance and give users easy access to monitor the secondary market performance of these securities when they start trading. With just over $2.8 billion due to settle over the coming month we expect there will be opportunities in the secondary market as investors sell existing holdings to fund the settlement of these new transactions. The question is where are the opportunities and what should you be looking out for?
Issuer | Security Type | Capital Structure | Issue Size | Fixed / Floating | Interest Margin / Coupon | Yield to Maturity | Term to Call / Maturity | Joint Lead Manager |
---|---|---|---|---|---|---|---|---|
Australia and New Zealand Banking Corporation | Capital Note (ASX Code: ANZPF) | Tier 1 | $970m | Floating | 3.60% | 5.98% | 8 Year | ANZ, CBA, GS, MQG, RBS, UBS |
National Australia Bank | Capital Note (ASX Code: NABPC) | Tier 1 | $1,125m | Floating | 3.50% | 5.77%* | 5 Year | DB, JPM, NAB, Evans, WBC |
AMP Limited | Capital Note (ASX Code: Not Applicable) | Tier 1 | $275m | Floating | 4.00% | 6.32%* | 5 Year | JPM, NAB, UBS |
Dicker Data Limited | Corporate Bond (ASX Code: Not Applicable) | Senior Unsecured | $40m* | Floating | 4.40%* | 6.67%* | 5 Year | FIIG |
Crown Resorts Limited | Structured Note (ASX Code: CWNHB) | Subordinated | $600m | Floating | 4.00% | 6.27%* | 6.3 Year | ANZ, CBA, NAB, WBC, DB, UBS |
*Unconfirmed and based on BBSW rates set as at 19 March 2015. It’s our mission to keep you updated so that your capital is protected and income is maximised. If you are looking for opportunities in the secondary market why not use our price calculator to assess an accurate and independent price/yield on all securities and then set a price alert based on your desired entry/exit price. That way you stay informed whilst BondAdviser does the hard work . The key to the high level of primary issuance and driving force behind the demand for yield products continues to be falling term deposit rates. The chart below shows how term deposits have given investors a superior rate of return relative to the traditional risk free rate since the GFC hit in 2008. Since 2008 regulations have changed and the banks have improved their liquidity positions ahead of the implementation of the Liquidity Coverage Ratio (1 January 2015). Three months into this framework the banks have less need for short term deposits (i.e less than 30 days) and hence the spread over the RBA Cash Rate is heading back towards the long term average. Unfortunatley for investors this long term average suggests negative real rates of return. If you have deposits rolling off over the coming year you should be conscious of the opportunities available in the primary and secondary markets. More importantly you should understand what is happening to deposit rates and why? For more information go to www.bondadviser.com.au