As a rule of thumb, we consider Major Bank Tier 2 securities as one of the best risk-adjusted capital investment for investors due to their superior capital structure ranking, non-discretionary interest payments and event of default terminology. Historically, while the retail (listed) Tier 2 market increased post-GFC, there was uncertainty among investors in the wholesale (over-the-counter) market regarding the premium associated [...]
In July 2016, a stress-test conducted by the European Central Bank (ECB) highlighted the “alarming levels of debt” carried by some of Europe’s biggest lenders. Among a few others, Spanish Bank Banco Popular was expected to fall short of capital requirements in a stressed scenario. Reason for failure The bank’s inherent weakness was emphasized when it posted a €3.5 billion [...]
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 [...]
During the Global Financial Crisis (GFC), bank consolidation was a major action undertaken to ensure global financial stability. In Australia, key transactions included Commonwealth Banks takeover of BankWest and the merger of Bendigo Bank and Adelaide Bank. Since then, market concentration in the Australian banking system has lessened competition among participants (Figure 1). Figure 1. Relative size of Australian banking [...]
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 [...]
In recent years, there has been a clear global focus of Environmental, Social and Governance (ESG) standards. As a result, companies have become more ethically conscious and developed new initiatives to demonstrate this behaviour to investors. One such initiative has been the rapid rise of the Green Bond market which is estimated to be ~US$150 billion. These instruments are like [...]
On the 22nd of March 2017, Villa World Limited (ASX: VLW) announced a new issue, Villa World Bonds (Prospective ASX Code: VLWHA). The bonds are expected to be issued on the 21st of April 2017. The minimum size of the offer is $50 million but will change based on demand, and the proceeds from the transaction will be used to grow [...]
In recent years, non-financial corporate security issuance into the ASX-Listed Debt & Hybrid market has dwindled. There has been a number of factors but a standout contributor has been the change to credit rating methodology known as ‘equity-credit’ where hybrid securities are classified as equity (instead of debt) from a credit rating perspective. This maintains the underlying issuer’s credit metrics when [...]
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.
