‘No Time To Yield’. That’s Blackrock’s theme for 2024. In other words, what are you waiting for? Hui Sien Koay, says Australians are sitting on too much cash and that when rate cuts come, deposit rates will drop dramatically. Now is the time to switch out of cash and take advantage of elevated yields.
On that note, there were four new issues that caught my eye this week:
- QBE has launched a Tier 2 subordinated bond. They ended up with two tranches:
- A $400m floating rate tranche with first call June 2030 and maturity at June 2035, at 3-month BBSW+195bps
- A $350m fixed to floating rate tranche with first call September 2034 and maturity September 2039 at 6.30% issue yield and a 225bps margin over semi-quarterly swap
- Telstra launched a six-year fixed rate domestic deal, with price guidance of 115bps over semi-quarterly swap. They raised $450m at 4.75%, paid semi-annually
- Qantas has mandated a 10-year Australian dollar bond
- Scentre Group is set to raise around $750 million in a new corporate hybrid this week, with a margin of around 250bps over 3 month BBSW, providing a yield of 6.85% at current rates.
If you are interested in private credit, then this excellent article from Michael Smith of Muzinich & Co into the US private credit market is a must-read. It provides a background to the asset class, including growth, performance and defaults.
We publish part of an excellent Moody’s paper on Australian companies issuing bonds in US dollars.
Benoit Anne, from MFS is back with an analysis of why the yield curve may not have worked as a recession indicator this time around. While Scott Solomon from T. Rowe Price explains why RBA rate cuts may not help the Australian economy.
Two new offerings this week include a hybrid from Scentre Group and a new fund from FIIG Securities.
The ETF market just keeps getting bigger. New data from Global X show the Australian market is worth more than $200 billion. Just this morning, I received news that Blackrock’s iShares fixed income ETFs have hit a milestone US$1 trillion in global assets, which comes a year after the global bond ETF industry reached US$2 trillion. Now, that’s big!
Have a good week.
