Earlier last week and before the more systemic selloff in risk assets, Italy’s 10-year government bond yields rose to a quite staggering 3.63% - the highest mark since 2014. Meanwhile, yields on the 10-year German Bund declined to an equally staggering 0.53% as the ‘lo spread’ between the two countries, which has long observed as a proxy for country risk, [...]
Throughout 2018, we have observed the listed Tier 2 financial hybrid industry continue to shrink as names such as Suncorp and Westpac redeem their respective instruments. However, what may not have been as obvious is the flattening of the Tier 2 curve that has occurred throughout the year. To fully understand the catalysts of this, as well as the changing [...]
Quantitative easing (QE) was first pioneered by the Bank of Japan (BoJ) way back in 2001, when it was employed as a stimulative economic policy, after the BoJ ran short-term rates down to zero. QE’s mechanism for stimulation is the purchase of debt securities by central banks (in the secondary market), causing the central bank’s reserve supply to increase and [...]
U.S. Federal Reserve chairman Jerome Powell loves an interest rate hike and is planning several of them. The recently-appointed Fed Chair is bullish on global economic health, stating that “the economy has strengthened” and in his view “inflation is moving up to target”. Direct statements like these from the moderate Republican have global markets pricing in 3-5 rate hikes in [...]
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 [...]
In the Australian fixed income market, the vast majority of debt instruments pay interest periodically and repay principal upon maturity (or an optional call date), providing flexibility in managing cash flow and asset/liability matching risks. In comparison to the “interest only” payment structure, is another type of bond structure known as “amortising”, which distributes principal and interest (P&I) distributions periodically, [...]
In an earlier article, we explored Ethical Fixed Income in Australia. In relation to this, an ethical product which is grabbing the interest of global investors are Social Benefit Bonds (SBBs). A social benefit bond (SBB) is an innovative way to match investors and outcomes which aims to better the wider society that we all live in via a targeted [...]
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 [...]
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 [...]
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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.
