Fixed Interest

Long-dated Hybrid yields peaked at 6% in late February, but with the 90-day bill rate falling 0.35% and the hybrid credit margins contracting by about 0.25%, the hybrids are now yielding below 5.50%. The market appears to have completed its bullish move, having moved sideways since the beginning of April.

FNArena provides a weekly update of Australian listed corporate bond issues, current pricing and yield data.

FNArena provides a weekly update of Australian listed corporate bond issues, current pricing and yield data.

FNArena provides a weekly update of Australian listed corporate bond issues, current pricing and yield data.

FNArena provides a weekly update of Australian listed corporate bond issues, current pricing and yield data.

Bonds are always lower risk than shares in the same company, but do carry some of the same risks. They also have unique risks that can be used to your advantage.

FNArena provides a weekly update of Australian listed corporate bond issues, current pricing and yield data.

FNArena provides a weekly update of Australian listed corporate bond issues, current pricing and yield data.

The conversion of TELYS4 and implications for the wider market.

FNArena provides a weekly update of Australian listed corporate bond issues, current pricing and yield data.

This year’s ASX Russell long term investing report, which assesses returns on a 10 and 20 year time span up to 31 December 2017, shows some surprising results.

FNArena provides a weekly update of Australian listed corporate bond issues, current pricing and yield data.

US bond yields have struggled to stay above 3%, German bond yields are around 0.3%, Japanese bond yields are around 0.09% and Australian bond yields are around 2.58%, with most well below their highs seen earlier this year. So, what happened? Should we still worry about inflation?

The Aussie iTraxx is a proxy for credit spreads in the Australian market. It is an index, not unlike the ASX All Ordinaries Index for equities, which provides information on the direction and trend of the market.

We have decent supply in a range of retail bonds at the moment. If you have some ‘lazy’ cash available, now might be a good time to consider investing for a higher return. We list 13 bonds with a mix of investment grade and high yield.

Cash is cash on hand – at call – money you or your fund manager can get at immediately. Anything else does not qualify.

Understanding the terms and the return of fixed income securities or interest rate securities as they are frequently named can be confusing. This article provides a guide that should help you to understand some of the different features of the investments and how to interpret the returns quoted, and includes a list of key definitions.

Shareholders have been spoilt by Telstra and big banks in recent years and can be forgiven for thinking the stocks can act like bonds. These shares, often tagged as “bond proxies”, have been consistent and delivered high income with franking credits making them broadly appealing to many investors. But recent history tells us you can’t rely on shares for income or capital preservation and so they should never be thought of as proxies for bonds.

Benchmark interest rates are rising and while it’s still only early days in the banking royal commission, the indiscretions are mounting, as are likely costs. The banks might feel the pinch but ultimately is going to be the customers that have to pay.

CBA recently launched a new bank hybrid hot on the heels of Westpac’s new issue, which has us questioning: are hybrids any better than bank shares? We think both will react similarly in a downturn but hybrids are more complex.

While some of the criteria are similar to those we use for assessing a company for share investments, there are critical differences when assessing it from a bond perspective.

A new calendar year is a good time to take a breather and consider your investment objectives for 2018.

There are four different ways to quote a yield:

A total of 46 of the ASX Top 50 companies issue bonds. This isn’t surprising as they are large international companies trading in foreign markets and require multiple sources of funding (see Table 1). But a couple of things did surprise me:

It’s getting harder and harder to find value in a very tight market. The Australian Itraxx is trading around 68 basis points – that’s a proxy for the average spread over the benchmark for an investment grade bond. It’s not much.

High yield bonds pay high returns for increased chance of volatility and loss, but that doesn’t mean they are ‘junk’. Rather, just like trolling around a second hand shop, you can find some gems, worth more than they seem. Companies may go on to perform strongly and the price of the bond rises as the credit margin contracts, providing investors with higher than expected gains – assuming interest rate expectations remain unchanged.

There’s something innately attractive about property. It’s tangible; it can be beautiful or have cultural, historical or sentimental value. Coupled with attractive negative gearing benefits for high income earners, the asset class has a lot going for it. 

On Monday, the Australian iTraxx – our local proxy for credit spreads – reached a new post GFC low of 71 basis points. Simply, this measure represents an average additional margin that investors expect to be paid for investing in an investment grade bond issue.

Disruptors are coming thick and fast and investors unaware of technological and social changes will be left taking stock of losses, wondering how tried and tested high dividend payers started losing ground to new, more agile technological adopters.

Just now we are hearing many fund managers suggest the sharemarket has become expensive — at the same time cash deposits continue to pay very low returns.

Most of the downgrades applied to regional banks such as AMP, Bank of Queensland, Bendigo and Adelaide Bank, Credit Union Australia and ME Bank.

Airports offer a runway to prosperity through predictable, steady returns

The residential property merry go round is always good, until it stops. Just ask some Perth home owners and investors.

The US Federal Reserve has finally increased interest rates from a range of 0.5 to 0.75 percent to 0.75 to 1.0 percent. It’s a long awaited and relatively significant increase, but looking back to early 2016 it’s taken a lot longer for the Fed to move than most market pundits expected.