The US Fed looks like it’ll cut interest rates this year while at home the RBA still hasn’t ruled out the possibility of a rate hike. Expert commentary varies widely. Sonal Desai from Franklin Templeton tells us we should be looking beyond whether the FED will cut but more at the type of cycle we can expect.
The local corporate bond market has experienced a flurry of activity over the last week, and here’s what caught my eye:
- Macquarie Group has launched an offer for Macquarie Capital Notes 7 (ASX: MQGPG) to raise $1bn, with the ability to raise more or less. The AT1 Notes have a first call date of 15 December 2031 with the margin guided at 265-285bps above 3mBBSW.
- NBN Co. printed $1.75 billion in senior, unsecured bonds yesterday:
- A $1 billion, 3-year tranche paying 3-month BBSW +87bps
- A $750 million, 7-year tranche paying 5% fixed coupon
- BP Capital is taking indication of interest for a benchmark bond:
- 5-year fixed 125bps over semi-quarterly swap
- 10-year fixed 165bps over semi-quarterly swap
- Credabl has launched an inaugural asset-backed security, secured by medical, dental, veterinary and allied health receivables with a $350m indicative volume
- Queensland Treasury Corp mandated a benchmark 2037 bond with a 5% indicative fixed rate
- Orix Australia mandated a 3.5-year senior unsecured bond
- Transurban mandated a 10-year fixed rate, senior secured bond.
There’s so much interest in private credit at the moment, and not just from domestic investors. One of the speakers on the PGIM webinar I listened to recently, indicated they were looking at growth opportunities in Australia. So, our lead article is from Paul Chin of Jamieson Coote Bonds where he discusses the relative merits of high grade versus high yield bonds and private credit.
Frank Danieli from MA Financial is the latest guest on our Fixated podcast and an expert in private credit, he dispels some of the criticisms but also explains what investors should be looking for when investing.
Meanwhile, Channel Capital has a new European private credit fund.
The rollercoaster ride continues says Robert Tipp from PGIM Fixed Income as the market fluctuates between the soft landing and recessionary views. But Tipp believes there is strategic value to include bonds in your portfolio.
Finally, T. Rowe Price is back with their monthly asset allocation views.
