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.

7 Mar, 2019

AT1 Hybrids in a Falling Interest Rate Environment

By |2021-09-24T10:43:35+10:00Mar 7, 2019|Education, Hybrids|

If you have been keeping up to date with comments about and from the Reserve Bank in 2019, you have almost certainly heard speculation about a possible cash rate cut.  Though the RBA has stated that the cash rate is ‘expected to remain unchanged for a considerable period’, the February shift to a ‘more evenly balanced’ stance on any cash [...]

7 Mar, 2019

Absorbing the Possible Blow to Imputation Credits

By |2021-09-24T10:43:35+10:00Mar 7, 2019|Education, Hybrids|

It would be safe to assume that popular search engines have witnessed a dramatic increase in ‘franking credits’ inquiries since the Leader of the Opposition divulged his party’s proposed changes to the scheme a year ago.  Whilst there is still water to go under the bridge on that front, the popularity of Australia’s dividend imputation system as a discussion point [...]

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 [...]

11 Apr, 2018

Hybrids: Is Now the Time to Buy?

By |2021-09-24T10:43:37+10:00Apr 11, 2018|Hybrids|

As discussed in a recent nabtrade interview with BondAdviser Director Nick Yaxley, the combination of equity market volatility and a low-yielding credit environment has caused investors to re-examine opportunities with the domestic ASX-listed hybrid market. Hybrids are a broad classification of securities issued by corporations that structurally contain both debt and equity characteristics, sitting below subordinated debt and above equity [...]

1 Mar, 2018

Listed Corporate Hybrid Update: APA First To Go In 2018

By |2021-09-24T10:43:37+10:00Mar 1, 2018|Bonds, Hybrids, Market Commentary|

For the past few years, ASX-listed corporate debt and hybrid securities have dwindled leaving investors with a shrinking opportunity set to diversify outside the AT1 capital instrument market. This reduction in supply began with the Origin and Woolworths Subordinated Notes (ASX: ORGHA, WOWHC) being called at the end of 2016. This was followed by Caltex, Goodman and Tabcorp redeeming their [...]

31 Jan, 2018

Are Current AT1 Hybrid Valuations Expensive?

By |2021-09-24T10:43:37+10:00Jan 31, 2018|Hybrids, Market Commentary|

Following a two-year long rally in trading margins, there has been increasing debate around the valuation (expensiveness) of Additional Tier 1 (AT1) hybrids. This notion refers to the true intrinsic value of these instruments which can be highly subjective among investors. There are many lenses that can be used in deciding whether an asset is either trading at fair value, [...]

17 Jan, 2018

Attribution Basics: Dissecting Hybrid Returns

By |2021-09-24T10:43:37+10:00Jan 17, 2018|Education, Hybrids|

In the realm of financial markets, a key topic of interest for many investors is performance attribution. Specifically, this refers to the individual components that form a security, portfolio or market’s total return over a pre-set time period. Depending on the required granularity of one’s analysis, the components can be broken down into many factors which can then be utilised [...]

13 Dec, 2017

2017 ASX-Listed Debt & Hybrid Wrap

By |2021-09-24T10:43:37+10:00Dec 13, 2017|Hybrids, Market Commentary|

Credit Performance... 2017 has been another strong year for the ASX-Listed Debt & Hybrid market with accommodative issuer fundamentals and strong market technical factors (demand and supply). Consequently, trading margins across most securities have marched lower, which has extended the almost 2-year tightening cycle since the last severe sell-off in February 2016. As a result (figure 1), 2017 has been [...]