Credit spreads are tight, but yields remain relatively high. This week we publish two very pertinent articles about yield.
First, an article from the Federated Hermes team showing spreads relative to historic ranges and even though they are tight, why fixed income is still attractive.
Second, an interview I had with global Emerging Market (EM) expert Damien Buchet from Finisterre. EM isn’t a sector I’ve had experience in and the nuances between countries was fascinating. From how Mexico is handling increased tariffs to China’s acceptance and its impact on a small proportion of GDP, impacts on other Asian countries to how Australian dollar investment into EM negates US dollar volatility. Importantly, EM countries are now far more resilient and there’s a much lower risk of contagion. Further, EM yields are outperforming high yield bonds across all credit rating levels. This article is well worth a read.
While we’re talking about yields here’s a list of new issues that caught my eye over the last few weeks:
- This morning Stockland launched a senior seven-year deal with price guidance of 150bps over semi quarterly swap
- SA Power Networks launched a three and 10-year green bond with price guidance of 100bps and 155bps over semi quarterly swap respectively
- Clearview Wealth raised $120m with a 10NC5 Tier 2 subordinated floating rate note at 350 bps over 3-month BBSW
- Australian Gas Networks mandated an 8.5-year deal
- The Bank of Nova Scotia launched a 6NC5 senior fixed to floating or floating bond with price guidance of 140bps over swaps
- HSBC raised $500m in a three-year floating rate note at 70bps over 3 month BBSW
- Worley mandated a seven-year senior deal
- NAB raised $2.75 billion with a $2.35 billion floating rate tranche at 83 bps over 3-month BBSW and a $400m fixed rate tranche with a 4.6% coupon rate.
There’s also plenty happening in the Asset Backed Security (ABS) space with Latitude, Angle Auto and Brighte all in the market this week.
Global private market asset manager, Hamilton Lane, examines private markets, including bonds and equities in our lead article this week.
Thomas Poullaouec from T. Rowe Price is back with his global asset allocation series. It has a dedicated following and if you are not already reading his views, it’s well worth joining the fan base.
Finally, just in case you missed it, here’s a link to last week’s podcast with Dr Laura Ryan from Ardea discussing her experience in finance, her research into gender and promotion and building a sustainable house in inner-city Sydney.
Have a good week!
