In early 2015, legal firm Slater and Gordon (ASX: SGH) acquired the professional services division of the controversial UK group Quindell Plc for $1.2 billion. The debt-funded acquisition, which management hoped to be transformational, has since resulted in large losses and been completely written down, weighing significantly on the firm’s earnings and balance sheet. The weak performance of the group continued [...]
The big story last week was the Federal Reserve’s 2-day monetary policy meeting. While US interest rates were lifted as expected, there was little indication of how the potential Trump policies may impact the economy moving forward, with Federal Reserve economic forecasts relatively unchanged. The Fed’s monetary decisions considers many economic inputs such as business investment, unemployment and consumer spending. [...]
Since November 2016, the surge in inflation expectations has been the key driver of the rise in long-term nominal interest rates. These expectations consolidated in Q1-2017 as markets awaited new direction, which came last week in the form of the latest US jobs report. This report essentially gave the Federal Reserve the green light to raise US interest rates. Consequently, [...]
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 [...]
On the 23rd of February 2017, the Australian Office of Financial Management (AOFM) (which manages the country’s debt sales), sealed a record $11 billion government bond deal. This was just one month after it set the previous record issuance of $9.3 billion (January 2016). The AOFM confirmed the bond will have a coupon of 2.75% and was priced at a yield [...]
Last week marked a busy period for financial markets. As we rounded out the final week of reporting season, there were a number of key events that kept markets on their toes. Trump’s much anticipated speech to US Congress revealed minimal detail into how key policy promises would be implemented and more importantly, how they will be funded. Nonetheless, markets [...]
In our recent outlook we mentioned that demand for credit products was exceptionally strong and the lack of issuance would create an illiquidity or 'scarcity yield' premium. A month down the track, issuance in the listed hybrid market has picked up but markets still remain starved for new product as negative net issuance (i.e maturing bonds greater than new issues) [...]
Along with most uranium miners, Paladin Energy (ASX: PDN) has faced increased pressure from decade-low uranium prices and over-supply of yellowcake (impure uranium oxide obtained during processing of uranium ore). With soft top-line growth and failure to sell a 24% stake of its flagship Langer Heinrich mine putting downwards pressure on its liquidity, the company has proposed a balance sheet [...]
Last week we entered the core of reporting season with a number of major financial and corporate issuers providing varied results. While the results have been broadly credit neutral against the backdrop of benign fundamentals, the equity market punished companies who failed to meet guidance which highlights the inherent leverage in current earnings multiples. In line expectations, the rebound in [...]
Equity and credit markets were slightly stronger last week, led by the US, as President Donald Trump signalled he would advance campaign promises to lower taxes. Bond markets were broadly unchanged last week but there has been a noticeable change in trend for market-implied inflation expectations (measured by the difference between nominal and inflation linked treasury yields). Inflation has been [...]
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An employee-owned financial services provider focused on the Debt Capital Markets.
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ABN 31 164 148 467 ‧ Important Information
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