Booming Market: New Issues and Investment Opportunities
Darryl Bruce
Executive Director, IAM Capital Markets
The new issuance market has been in full swing in recent weeks. New bond issues are coming thick and fast and all, without exception, are being met with very strong demand. It is exciting to see the AUD bond market grow into a deeper and more liquid market, in line with what we see in many other developed nations.
In the investment grade space, there has been a flurry of activity from the State Governments. Treasury Corp Victoria (TCV), Queensland Treasury Corp (QTC) and New South Wales Treasury Corp (TCorp) have all recently tapped existing longer dated fixed rate issues. Offering returns in the low to mid 5% region, I think that these looked highly attractive as a long term hold within diversified portfolios.
Elsewhere in the investment grade market we have seen issuance from local companies including IAG, Liberty Financial, Transgrid, HSBC, NBN and Port of Brisbane together with so-called Kangaroo issues from Nestle and Banco Santander.
On the syndicated loan front, it has been very busy. We have limited supply of Foxtel, which is offering a very attractive return given the strength of the credit. We also had another US$10m loan offering which was filled in record time. If this level of demand continues, I expect that we are likely to see a lot more supply in the syndicated loan space. On that point, I am expecting to see more syndicated loan supply this week, which is also likely to be met with strong demand.
In the high yield market, MoneyMe launched a $130m issue last week. This is a large issue for the AUD unrated market to digest, however, it also was met with strong demand, which saw the orderbook filled very quickly.
As you can see, there is plenty going on, whether you are an investor that favours the stability of investment grade, or one that likes the additional yield on offer in the syndicated loan or high yield markets. If you are interested in any of the above issues, or you would like to find out about what is coming up in the new issue market, do not hesitate to contact your friendly IAM Relationship Manager.
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