18 Apr, 2019

Another Peril of Vertical Integration – URF

By |2021-09-24T10:43:35+10:00Apr 18, 2019|Bonds, Case Study|

The financial world has been littered with pieces discussing, generally in a distinctively disapproving tone, the true motivations behind the Evans Dixon Group and its New York-focused US Masters Residential Property Fund (URF).  Although we will not completely dissect the strategy’s positives and negatives since inception, there are some very obvious lessons to be understood. In isolation, the initial premise [...]

4 Apr, 2019

Yield Parity, Not Risk Parity

By |2021-09-24T10:43:35+10:00Apr 4, 2019|Bonds, Case Study|

Much has been said in recent months about the wider stability (or lack of) within Italian Banking. Likewise, the apparent unpredictability of US markets has also been well publicised.  BondAdviser has provided various comments on both topics in previous additions of Up the Curve, available here. Late last month, following a systemic selloff in risk assets, the 10-year government bond [...]

21 Mar, 2019

Research Update: Nufarm Subordinated Step-Up Securities

By |2021-09-24T10:43:35+10:00Mar 21, 2019|Bonds, Hybrids|

From a relatively benign main reporting season for corporates, we have been rather active in March as subscribers would already have noted. Most recently and following its own trading update, we provide some thought leadership on the complicated and convoluted outlook for Nufarm Subordinated Step-Up Securities for subscribers here.

24 Jan, 2019

How are Stocks and Bonds Correlated?

By |2021-09-24T10:43:35+10:00Jan 24, 2019|Bonds|

Historically, bonds and stocks move inversely to each other, and while this hasn’t always been the case, this relationship has held in recent years. However, as with most rules, it is not without exceptions. Broad macroeconomic conditions factor into the Reserve Bank of Australia’s (RBA) decisions on the RBA Official Cash Rate and affect investors’ risk appetite. Bonds and stocks [...]

21 Nov, 2018

What Causes Bond Market Illiquidity?

By |2021-09-24T10:43:36+10:00Nov 21, 2018|Bonds|

Liquidity is an important consideration for any investor, whether it be in equities, fixed income or alternative asset classes. Liquidity is the degree to which an asset or security can be readily bought or sold at a mutually agreeable market price, and this visible by the trading volume of a given security, with a higher level of trading activity leading [...]

21 Nov, 2018

Fixed Income Valuation: Understanding Trading Margins

By |2021-09-24T10:43:36+10:00Nov 21, 2018|Bonds|

Fixed income instruments come in many different forms, with the most commonly seen in Australia being bonds. The variable and bespoke nature of bonds (by virtue of being traded over-the-counter) implies a great deal of flexibility in terms of seniority, security and income structure.  The two most common types of bond payments seen in fixed income markets are fixed rate [...]

7 Nov, 2018

BICRA and TLAC: Revisiting Bank Hybrids Ahead of Possible Rating and Regulatory Changes

By |2021-09-24T10:43:36+10:00Nov 7, 2018|Bonds, Market Commentary|

Credit rating agencies such as Moody’s and Standard & Poor’s (S&P) have been in focus throughout 2018 as investors have watched the Australian financial landscape increasingly enter new territory.  This has largely been a function of the Royal Commission into Banking and Financial Services, as well as the more unstable political environment seen throughout the year.  However, despite the negative [...]

7 Nov, 2018

Corporate Bonds May Be in Decline… But Are Corporate Loans the Answer?

By |2021-09-24T10:43:36+10:00Nov 7, 2018|Bonds|

The decision by G8 Education (ASX: GEM) to redeem and refinance its $50 million senior unsecured bonds in March 2018 was reasonably standard practice as far as corporate bond markets are concerned given a company in reasonable financial health. However, the $450 million syndicated bank facility announced in October was an interesting development in the long-running trend of Australian companies [...]

18 Oct, 2018

Regionals vs Majors: Could We See A Pricing Reversal?

By |2021-09-24T10:43:36+10:00Oct 18, 2018|Bonds, Hybrids|

Ever since the Global Financial Crisis (GFC), funding costs in capital markets for both major and regional Australian banks have been steadily declining. This was first sparked by the Australian Government Guarantee Scheme which reduced the underlying risk in Australian authorised deposit-taking institutions (ADIs). In this post-GFC era, funding costs have broadly moved in line with changes in the RBA [...]