In context of bond valuations, accrued interest is defined as the difference between the dirty and clean price. It is the interest that has accrued but not been paid since the last payment date. In most cases securities are not traded on payment dates and therefore investors are entitled to the interest earned but have not received for the period [...]
For investors of Australian shares, dividends paid to them by Australian resident companies are taxed under a system known as 'imputation'. It is called an imputation system because the tax paid by a company may be imputed or attributed to the shareholders. The tax paid by the company is allocated to shareholders by way of franking credits attached to the dividends [...]
In the current low-growth, low-yield environment, there is no question investors are finding it difficult to generate short-term returns with an acceptable level of risk. For this reason, there has been a push for new products that represent an alternative to traditional cash investments (i.e. term deposits). For this reason, ‘Cash’ Exchange Traded Funds (Cash ETFs) have gained traction among [...]
On the 22nd of May 2017, Standard and Poor's (S&P) announced the Issuer Credit Ratings of 23 Banks (both domestic and foreign branches) operating in Australia would be downgraded due to concerns around potential economic imbalances. While there has been a lot of coverage around the potential consequences of this rating action, we believe it is important to break down the [...]
In the low-interest rate environment, domestic markets have displayed a growing appetite for high-yield bond issuance in recent years. Aside from the increased risk compensation (higher coupons), investor interests are also protected by intermediaries, namely bond trustees. A bond trustee is a company designated by the issuer as the custodian of funds and official representative of bondholders. The trustee plays [...]
Security covenants play a crucial role in investor protection and serve as a major contributor to credit analysis. While financial institutions such as banks and insurance companies are subject to regulatory requirements, a security’s covenant package is instrumental to downside protection when investing in non-financial corporate debt issuers. Covenants are legally enforceable conditions that borrowers (the issuer) and lenders (the investors) agree [...]
When investing in the ASX-Listed Debt & Hybrid market, an important consideration is liquidity. Given the market’s size of ~$60 billion, liquidity can be limited and if a major announcement occurs it may be difficult to get in or out of positions. For this reason, investors may have to accept a lower price to sell or pay a higher price [...]
2017 has been marked by both growing global geopolitical risk and uncertainty surrounding the 'overheating' domestic property market. Earlier this month, the Reserve Bank of Australia (RBA) released its Financial Stability Review (click here) focusing primarily on potential economic instability as a result of the high level of household debt. While this is not new, the review highlighted riskier types of borrowing, [...]
Over the past decade, banking regulation has evolved immensely. In response to the Global Financial Crisis (GFC), the Financial Stability Board (FSB - an international body that monitors and makes recommendations about the global financial system) fine-tuned the criteria for what constitutes a Global Systemically Important Bank (G-SIBs) to avoid the severe moral hazard (i.e. too big to fail) that [...]
In Australia the fixed income asset class receives comparatively less media attention than equities. For this reason, many investors find fixed income jargon, research and its related concepts confusing and hard to understand. However, in periods of extreme volatility relatively safe income securities can be the backstop to portfolio losses by offsetting the under-performance of other asset classes. While equities [...]
An employee-owned financial services provider focused on the Debt Capital Markets.
An employee-owned financial services provider focused on the Debt Capital Markets.
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ABN 31 164 148 467 ‧ Important Information
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
