The concept of a risk free-rate, or the yield of government-issued securities, has long been one of the fundamental building blocks of capitalism and the basis of modern financial literature. It is a concept so intuitive that the general investing public in much of the developed world has largely taken for granted, both academically, and in most cases, in practice. [...]
The mere mention of credit-default swaps (CDS) would cause many investors to cast their minds back to 2008, when these credit derivatives were at the heart of the global financial crisis (GFC). In case you missed Margot Robbie’s explanation in the 2015 film, The Big Short, a CDS is a form of contract in which the purchaser gets paid out [...]
In Australia, the fixed income market, especially the exchange-traded part that is available to retail investors, is dominated by well-established, household name issuers such as the major banks and other large financial services companies. Whilst retail investors are usually quick to identify an issuance from a household name issuer, many, if not all, tend to overlook a fundamental question: Who [...]
Within the fund management sector, funds are generally categorised as active or passive depending on how actively the fund is being managed and whether it is aiming to outperform the market or more simply to closely mimic market performance. For example, the Vanguard Australian Shares Index Fund (VAS) is designed to track the ASX 300 benchmark performance over the long-term [...]
Normally, fixed-income securities with a longer maturity date provide a risk premium for investors when compared to shorter-dated securities, reflecting the increased complexity inherent in their risk profiles (mainly interest rate risk and sometimes extension risk) over a longer investment horizon. This is best shown with a very familiar, upwardly sloping yield curve (Figure 1). Here, the swap curve increases [...]
Since March this year, the benchmark local borrowing rate for Australian banks – the Bank Bill Swap Rate (BBSW) has risen sharply from ~1.80% to over 2.00% as we type, reflecting higher bank funding costs. In the meantime, USD funding costs as represented by the London Interbank Offer Rate (LIBOR) have also risen significantly, after surpassing BBSW since January this [...]
Tabcorp recently announced that it had successfully priced US$1.4 billion long-term notes to investors in the US Private Placement (USPP) market. The placement comprises four USD and two AUD-denominated tranches, with maturities evenly spaced between 8 – 18 years. The notes will be issued in June 2018. All USD proceeds will be swapped into AUD, resulting in total AUD proceeds [...]
As most equities pay dividends, the majority of fixed-income securities (excluding zero-coupon bonds etc.) pay coupons periodically to investors throughout the instrument’s life. However, fixed-income securities’ interest payments are non-discretionary compared to optional share dividends and failure to fulfil bond obligations (including paying interest) can have severe consequences including default, credit rating downgrades, trading penalties and adverse regulatory actions. This [...]
The past month has seen US 10-year Treasury Note yields skyrocket, up almost 20% from the beginning of January to 2.8714%, as investors foresee a large boost to the US economy on the back of President Donald Trump’s tax reform and more activity from the US Federal Reserve Bank. Indeed, Chair of the Federal Reserve Jerome Powell recently stated that [...]
The term structure of interest rates is the relationship between interest rates or bond yields and different terms or maturities, which is also commonly known as the yield curve (Figure 1). The term structure of interest rates is the single most important benchmark in the fixed income world, central to all debt securities and plays a vital role in the [...]
An employee-owned financial services provider focused on the Debt Capital Markets.
An employee-owned financial services provider focused on the Debt Capital Markets.
© Bond Adviser Pty Ltd ‧ ASFL 456783 ‧ ABN 31 164 148 467 ‧ Important Information
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
© Bond Adviser Pty Ltd ‧ ASFL 456783
ABN 31 164 148 467 ‧ Important Information
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
