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Indexed linked bonds (ILBs) have been issued in the Australian market for some time, and the Commonwealth has re-opened the market in November 2009, meaning investors have now become able to access...
Executive summary
One of the “Big Four‟ Chinese banks and the largest listed bank in the world by market capitalisation
ICBC holds world number one in existing an...
As discussed in the article “S&P rating methodology changes likely to lead to Aussie bank downgrades” rating changes sometimes result in forced selling by funds or investors that ha...
Executive summary
Bank of Queensland is a regional bank with a focus on mortgage lending and equipment financing. The majority of lending is from its home state of...
Contents
What is a Tier 1 security?
Regulatory announcement by APRA good news for Tier 1 investors
How we analyse foreign currency Tier 1 securities – an...
Executive Summary
Dalrymple Bay Coal Terminal (DBCT), located south of Mackay Queensland, is the world’s largest coal export terminal. Including recent expansions, ther termi...
Executive Summary
Suncorp Group (Suncorp) reported a full year profit result to 30 June 2011 that exceeded expectations. While net profits declined by 42% to $453m the company was...
Executive Summary
Bendigo and Adelaide Bank (Bendigo) is a regional bank that specialises in retail banking with a focus on rural communities. It also owns Rural Bank and operates...
Executive Summary
AXA SA (AXA) is one of the world’s largest insurers, with a very strong brand name and highly regarded management.
Headquartered in France, AXA op...
Executive summary
AXA SA (AXA) is one of the world’s largest insurers, with a very strong brand name and highly regarded management.
Headquartered in France, AXA op...
Executive Summary
There are plenty of uncertainties that keep investors awake at night - volatile equities, inflation, property crash, rising interest rates, global uncertainly and many m...
Executive Summary
MS is a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services...
New South Wales Treasury Corporation (TCorp) is the central financing authority for the State of New South Wales. It was established in 1983 under the Treasury Corporation Act 1983 (NSW) and its pr...
Executive Summary
Praeco Pty Ltd (Praeco) is the consortium which was contracted to build and maintain the Headquarters Joint Operations Command (HQJOC) for the Australian Defence...
Executive Summary
Praeco Pty Ltd (Praeco) is the consortium which was contracted to build and maintain the Headquarters Joint Operations Command (HQJOC) for the Australian Defence...
Executive Summary
Sydney Airport Finance Company Limited (SAFC) is the wholly owned financing company of Sydney Airport and it is through SAFC that Sydney Airport’s senior se...
Executive Summary
Just last week in our hybrid review we outlined that the PaperlinX hybrid (PXUPA) is a high risk security and that reality has come to the fore with the c...
Executive Summary
Elders recently announced its first half profit result for 2011 and despite reporting a statutory loss, the company managed to eke out a small underlying profit. The res...
PaperlinX released a market update today revealing an expected underlying loss for the full year in the range of $7.0m-$14.0m, after adjusting for the impact of the foreign currency option and disc...
Executive Summary
Sydney Airport Finance Company Limited (SAFC) is the wholly owned financing company of Sydney Airport and it is through SAFC that Sydney Airport&rs...
Executive Summary
Downer EDI Limited (Downer) is an ASX listed engineering and services firm providing engineering solutions across a number of sectors to clients th...
Executive Summary
National Wealth Management Holding (NWMH) is a wholly owned subsidiary of National Australia Bank (NAB). It is effectively a holding company for th...
Executive Summary
Mirvac is a diversified real estate group with a property trust (holding office, retail and industrial assets) and a high end residential property...
Executive Summary
Stockland is a diversified real estate group with commercial, residential and retirement living communities.
The company delivered a stro...
A portfolio targeting 6 to 7% returns should be low risk and offer good liquidity. I would always suggest roughly 10% be held in a mix of At Call and Term Deposit funds for expenses and as a pool...
This week in the second installment of our four part series, we construct a fixed income portfolio with a target return of 8%. Investments once again comprise low risk fixed income securities wit...
To achieve a return of 10% we need to focus only on high yielding fixed income issues, which means we have to sacrifice some liquidity and diversification compared to portfolio’s targeting...
Fixed income generally isn’t regarded as being a high yielding asset class but the following portfolio aims to achieve a 12% return. This equates to equity like returns for a portfolio that...
Over the last four weeks, we’ve outlined four portfolios, all targeting different returns. We’ve had many calls asking that we construct portfolios for an investment of $500,000. ...
Executive Summary
Bendigo and Adelaide Bank is a regional bank which offers retail and wholesale banking services across the country.
First half net profi...
Executive Summary
Telstra is one of the largest company‟s in Australia and the largest telecommunications company in Australia. By virtue of historic monopoly pos...
Executive SummaryJEM (Southbank) Pty Ltd is a special purpose vehicle used by the consortium which was contracted to build and maintain the Southbank Education and T...
Late January Rabobank announced details of a new US$2bn issue of Capital Securities, the first in the new breed of loss absorbing Tier 1 securities following finalisation of the new Basel III ca...
Executive SummaryLeightons Holdings is Australia's largest contracting, services, contract mining and project development company. Its operations are conducted throu...
Executive SummaryOne of the ‘big 4' Chinese banks and the second largest bank in the world by market capitalisationOver 60% owned by the Chinese gover...
Executive SummaryThe Dampier-to-Bunbury natural gas pipeline is the primary gas transmission pipeline in Western Australia, connecting the states' significant gas re...
The impact of the Queensland floods on Suncorp-Metway Insurance, including Vero Insurance (“Suncorp”) is expected to be manageable and is not expected to have a material impact on Sunco...
On 12 December 2010, Treasurer Wayne Swan released his much anticipated banking competition package. The package misses an opportunity to make some meaningful reforms, however, there are winn...
Executive SummaryDalrymple Bay Coal Terminal (DBCT), located south of Mackay Queensland, is the world's largest coal export terminal. Including recent expansions, th...
Executive SummaryCBA is Australia's largest financial services organisation and a member of the ‘big four' banking group.The bank is soundly capitalis...
The Australian Commonwealth Government currently issues debt securities to the public in the form of Treasury bonds, Treasury indexed bonds and Treasury notes. The issue of Australian debt instr...
Executive SummaryThe Queensland Treasury Corporation (QTC) is the Queensland Government's central financing authority and corporate treasury service provider. All QTC's...
Executive Summary
The Queensland Treasury Corporation (QTC) is the Queensland Government's central financing authority and corporate treasury service provider. All Q...
Executive SummaryThe Queensland Treasury Corporation (QTC) is the Queensland Government's central financing authority and corporate treasury service provider. All QT...
Executive SummaryDowner EDI Limited (Downer) is an ASX listed engineering and services firm providing engineering solutions across a number of sectors to clients throug...
Executive SummaryME Bank is unique within the Australian ADI sector being owned by a collection of 35 industry superannuation funds and run for the benefit of the membe...
Executive SummarySydney Airport Finance Company Limited (SAFC) is the wholly owned financing company of Sydney Airport and it is through SAFC that Sydney Airport's seni...
Executive SummaryBendigo and Adelaide Bank is a regional bank which offers retail and wholesale banking services across the country.Net profit after tax rose 1...
Executive SummarySydney Airport Finance Company Limited (SAFC) is the wholly owned financing company of Sydney Airport and it is through SAFC that Sydney Airport's s...
WATC 2010-11 Funding RequirementThe borrowing requirement for 2010/11 is expected to be $9.69bn, of which $8.34bn is for long term borrowing and $1.35bn for short term borro...
NTTC 2009-10 Funding RequirementThe borrowing requirement for 2009/10 was $572m, which included $376m to refinance existing debt and $196 new money. The Territory expected t...
SAFA 2010-11 Funding RequirementSAFA's funding requirement for 2010-11 is forecast at $5.1bn. This reflects the change in the amount of new borrowings from public sector cli...
TASCORP 2010-11 Funding RequirementAccording to the June 2010 budget, the Tasmanian Government will spend $1.83bn on infrastructure over the next four years, $726m of thi...
TCV 2010-11 Funding RequirementTCV has a funding requirement of $5.85bn for the financial year ending 30 June 2011 as set out in the May 2010 budget. The split is as foll...
A report on Praeco Tranche 2 Fixed Bullet 2020/2022 Bond.Commonwealth Government (AAA) backed revenue stream in the form of monthly payments to cover debt service, opex and equity retur...
Executive SummarySuncorp Group (Suncorp) reported an encouraging set of full year results to 30 June 2010. Whilst profitability still lags its peers and margin press...
Ramsay Health Care announced a good set of results on 26 August but also confirmed that it would not call the CARES hybrid (RHCPA) in October, instead opting to step-up the margin from 2.85% to 4.8...
Macquarie Airports (MAp) released its half year results which highlighted strong results from its major asset Sydney Airport. Sydney Airport EBITDA increased 12.7% for the half year compared to 1H0...
Fairfax Media today released its FY10 results. Overall the result showed a considerable turnaround in revenues and EBITDA in the second half of the year, leading to a modest improvement in EBITDA o...
Detailed report on Rabobank following the release of 1H10 results on 25 August 2010.Executive summary:Rabobank is one of the safest banks in the world with a Tier 1 ratio of 14.9...
Gunns Limited released its full results for the 2010 financial year which were in line with the preliminary results released on 16 August 2010. Gunns Limited's improved second half result has impro...
The PaperlinX result for the full year 30 June 2010 wasn't a bad result (but from low expectations given where they were at half year) with one big positive for hybrid investors with the continued...
Goodman Group announced operating earnings of $310m for the 2010 financial year (but a statutory loss of $562m as a result of first half revaluations) in an environment of continuing global weaknes...
Australand Property Group has released its half year 2010 results.Executive SummaryAustraland is one of Australia's major diversified property groups, with a...
This is an aggressive risk portfolio with a long term focus that seeks to provide equity like returns for debt like risk. By investing further down the capital structure, it is possible to obtain h...
My investment goals from a fixed income allocation perspective are modestly biased towards growth. My personal circumstances are a little unusual in comparison to most in that I have a significant...
The following is a fixed income portfolio based on $1m to invest, generally with a “hold to maturity” view. I define myself as conservative and remain concerned with aspects of the glob...
Detailed report on Swiss Re following the 2Q10 results released 5 August 2010.Executive SummarySwiss Re is a Swiss-based global reinsurance company with...
Detailed report on AXA SA following the 1H10 results released 4 August 2010. Executive summary:AXA SA (France parent, not AXA Asia Pacific) is one of the world's largest ins...
Detailed report on AXA SA following the 1H10 results released 4 August 2010. Executive summary:AXA SA (France parent, not AXA Asia Pacific) is one of the world's lar...
Detailed report on Lloyds Banking Group plc (LGB) incorporating HBOS posts half year results.Deemed “too big to fail” and systematically important to the UK. One in th...
On 26 July 2010, the Basel Committee on Banking Supervision released proposed changes to Basel III, the blueprint for future banking regulation. The following article looks at the revisions in deta...
Gavin Madson our infrastructure and fixed income analyst has created an aggressive portfolio for retail investors looking for a high yielding investment strategy.
Brad Newcombe, Director of Listed Interest Rate Securities, outlines an aggressive fixed income portfolio aimed at generating high cash and overall returns.
Generally, the following note will seek to allocate a bond portfolio in a way that maximizes return over the forecast period. In order to execute this goal, the following steps are followed: (i) de...
GE has released their results for the second quarter of 2010.Executive SummaryOne of the world's largest companies with significant diversification by geograph...
Elders own a disparate range of rural businesses whose performance has been impacted by tough economic conditions in the sector.The company has recently downgraded ea...
This report is the annual review of the Macquarie Group. Key points are as follows:Profit for the year ended March 31 was $1,050m, up 21% from the previous year. This was b...
Multiplex has reported its financial results for the six months to 30 June with no indication that redemption of its Multiplex SITES (MXUPA) hybrid is imminent. The company reported...
Bank of Queensland is a regional bank with a focus on mortgage lending and equipment financing. The majority of lending is from its home state of Queensland.The bank has stabilised p...
Downer EDI Limited (Downer) is an ASX listed engineering and services firm providing engineering solutions across a number of sectors to clients throughout the Asia-Pacific.Downer's business profil...
RWH Finance Pty Ltd is the financing vehicle for RW Health Partnership Pty Ltd which entered into a public private partnership (PPP) with the Victorian government for the design, construction and o...
Sydney Airport released an upbeat outlook as it seeks to manage upcoming refinancing, and it confirmed our positive view on Sydney Airport, and more broadly the Australian airport sector. Australia...
Suncorp is a financial services conglomerate providing banking, insurance, investment and superannuation services. The company was formed by a Queensland government instigated merger o...
After a tumultous eighteen months, the property trust/developer sector seems to have stabilised over the last six months. While there were further writedowns of property assets as capitalisation ra...
After a tumultous eighteen months, the property trust/developer sector seems to have stabilised over the last six months. While there were further writedowns of property assets as capitalisation...
This report is an annual review of National Wealth Management Holdings group. Key points are as follows:
National Wealth Management Holding (NWMH) group is a wholly owned subsidiary...
This report is a trading update on AXA SA Tier 1 bonds. Key points are as follows:AXA SA (France parent, not AXA Asia Pacific) is one of the world's largest insurers, with a very str...
Usually fixed income investors tend to segment hybrids away from fixed income as these securities typically trade on equity exchanges while most fixed income products are purchased over the counter...
Our high yield hybrid portfolio has generated stellar returns over the past 12 months. We are constantly looking for the best returns however, and after scouring the high yield investment universe...
Lloyds TSB Group was renamed Lloyds Banking Group plc (LBG) on 19 January 2009 following the acquisition of HBOS plc. One in three UK residents bank with Lloyds Banking Group, making it the largest...
Envestra owns regulated gas distribution networks in five states and territories across Australia. With limited refinance or regulatory risk, Envestra currently offers solid returns for what is a s...
While fashions come and go, good portfolio diversification is always in style. In this note, the main benefits of inflation linked bonds are briefly summarized, along with some mechanical aspects o...
Despite the bout of misinformation being proliferated throughout the financial media, hybrids are exactly what the name implies - a security with a mix of debt and equity features, with a correspon...
ElectraNet owns and operates South Australia's electricity transmission network which by its nature and the cost of duplication, is a monopoly infrastructure asset with limited threat of substituti...
The Australian airport sector has emerged from the recent downturn relatively unscathed compared to its international peers and is well positioned for growth going forward.
A detailed research report on WA Network Holdings (WAN), including the following:WAN s bonds are credit wrapped by FSA (rated AAA/Aa3 by S&P and Moody s). Despite the fac...
Origin is a well-established company operating in the Australian and New Zealand energy sectors, with a strong history of consistent profits. It ranks in the top two against its peers on most key o...
A detailed research report on Deutsche Bank's annual results. Key points are:
Deutsche Bank (DB) is the largest German Bank by assets and is systematically i...
Bendigo and Adelaide Bank (BEN) yesterday announced its 2010 first half result. Key points are as follows:
Net profit after tax was $104.1m, a 106% increase on the $50.6m report...
Recent interest rate spreads between long dated semi-government ILBs and Commonwealth Government bonds have widened, even though the opposite has occurred in the nominal market. Several reasons can...
Over the last 12 months our research on hybrids has mostly focussed on securities available at bargain prices. However, with credit markets recovering, prices of many hybrids and retail bonds have...
2009 was the perfect time to load up on hybrid assets with 2010 looking like the year to cash in. The financial market meltdown that occurred this year presented a once in a lifetime opportunity to...
Elders Rural Bank (ELD) is a joint venture between Bendigo and Adelaide Bank Ltd and Elders Ltd. ERB has a strong affiliation with rural Australia as demonstrated by its loyal customer base and gro...
A detailed report on the ANZ CPS 2, including the following key points:
CPS 2 is the new hybrid issued by the ANZ Bank offering a margin of 3.10% to 3.30% over the 90 day bank b...
Rabobank (RABO) is one of the safest banks in the world with a tier 1 ratio of 13% and has been rated the highest possible level by Moody's since 1986 and Standard & Poor's since 1984. This is...
Financial markets have factored in an increase in interest rates of 0.25% as a near certainty. However, the RBA might be tempted to increase rates by 0.50% or more in a move to stop off the threat...
On Friday night, GE reported its 3Q09 results. Whilst the results were a little disappointing from an equity perspective, the boring, “no surprises” release was welcomed from a debt hol...
A comparison of Australia's leading property groups including Westfield (WDC), Dexus (DXS), Stockland (SGP), Mirvac (MGR), GPT, CFS Retail, and Goodman (GMG).
Sydney Airport Finance Co. Ltd is the finance arm of Southern Cross Airports Corp. Holdings Ltd. (SCACH). SCACH own and operate the Sydney Airport lease over land and buildings and the operator lic...
A research report on the Commonwealth Bank PERLS 5 hybrid. Key points are:
PERLS 5 is the new hybrid issued by the Commonwealth Bank offering a margin of 3.40% over the 90 day b...
A review of the recent performance of select major bank hybrids shows a strong rally in price, including the Commonwealth Bank (CBA), Macquarie Bank (MQG), National Australia Bank (NBA) and Westpac...
Lloyds TSB Group plc was renamed Lloyds Banking Group plc (LBG) on 19 January 2009 following the acquisition of HBOS plc. LBG is now the largest UK retail bank and has leading market shares in many...
Royal Bank of Scotland (RBS) is now 70% owned by the UK Government and considered "too big to fail" but changes to Bradford & Bingley (a fully nationalised UK bank) sub-debt highlight the...
An updated review on building sector companies to take into account the significant capital raisings recently undertaken. Companies reviewed include Stockland (SGP), Mirvac (MGR) GPT...
Comprehensive research piece on Macquarie Group (MQG) including a review of the subordinated debt and hybrid issues. Key points are as follows:
Profit for th...
This report analyses ING Groep N.V. and its subsidiaries including ING Bank and ING Australia trading as ING Direct. ING Australia currently issues repo eligible AUD$ bonds trading at a discount to...
National Wealth Management Holdings is a subsidiary of National Australia Bank which operates the bank's wealth management operations including the MLC division.
Citigroup Inc is one of the largest US banks considered "too big to fail" and "systematically important to the US economy". Recent results have been poor and write-offs are likely to continue...
Swiss Re is a leading and highly diversified global insurer. 1Q09 result returned to profit of CHF 150m (1.11 CHF = 1US$) following a loss of CHF 864m for FY08, improving the Company's outlook...
Headline 1Q09 results were very positive yet record revenue in Fixed Income Currency and Commodities (FICC) offset declining revenue elsewhere and highlighted market volatility. GS passed...
Morgan Stanley announced a small loss for 1Q09 of US$177m. FIIG Research expect additional further write-downs that could lead to further losses but nothing of the magnitude of the 4Q08 l...
The risks for European bank sub-debt and hybrids are considerable, however, senior debt which ranks higher in the capital structure, should be protected by European governments and at current...
Subsequent to our last Macquarie Group research note dated 24 February 2009, the company has made a number of material announcements. This note provides an update of events occurring since tha...
The prices of most hybrids have increased significantly in recent weeks however there still remains some excellent opportunities in regional bank securities. Many of these securities are offer...
Brookfield Multiplex Group (Multiplex) have announced their result (an abridged 6 month period to align with its parent) for the period ended 31 December 2008 subsequent to our last note dated 11 F...
A comprehensive inflation piece outlining the prospects for inflation and investment products that act as a hedge against inflation including capital indexed bonds.
Tabcorp is a diversified gambling and entertainment company with interests in the traditionally recession-proof sectors of gaming, wagering and casinos. The gaming and ente...
In its full year review. HSBC Finance stated it made a net loss in 2008 of US$2,783m. The Bank announced approximately $100bn of HSBC Finance assets would go into run-off, although credit card and...
The following research is a comparison of the building sector participants who offer bonds in the Australian dollar denominated market, including Stockland (SGP), Mirvac (MGR), GPT and CFS Retail....
HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from more than 9,500 offices in 85 countries and t...
AMP is a well capitalised financial institution and one of the largest investment managers in the Asia Pacific region with a diverse range of revenue streams. The AMP Notes are an unsecured su...
Since our last report, AMEX default rates have moved faster and higher than expected. The January 2009 annualised default rate of 8.29% (up 1.06% over December) is still expected to rise and the co...
Contrary to popular opinion, the time to buy inflation linked bonds may not be, as usually expected, when inflation actually occurs. That may well in fact be the time to consider selling. The time...
Woolworths (WOW) is one of Australia's largest and most profitable retailers with a diverse range of brands. The company has a strong balance sheet and the risk of any credit event is regarded as l...
PaperlinX operates a number of low margin capital intensive businesses suffering from poor operational performance and debt issues. It is also now in breach of debt covenants leaving it at the merc...
Santos (STO) is one of Australia's major oil and gas companies with a large exposure to South Australia's Cooper Basin. In recent years it has been diversifying its exposure through liquefied natur...
Orica is a global Australian-based manufacturing company with both geographical and product diversity. The company has a strong balance sheet subsequent to a $913m capital raising in July 2008...
Gunns is a forestry company that has recently been suffering financial difficulties due to political pressures regarding its products, difficult operating conditions and a high debt burde...
Macquarie Airports is an infrastructure fund with partial and complete holdings in several airports, both domestic and international. The group announced at its recent half year profit presentation...
Brookfield Multiplex (Multiplex) is a non-listed group owning a property trust and also operating a diverse construction/property development related business. The recent trading performance of the...
Southern Cross Airports Corporation (Sydney Airport) is the owner and operator of Sydney Airport. The company has high net debt levels and low interest cover but due to the monopoly nature of the b...
Fairfax is an Australian based media company which has recently diversified from its traditional metropolitan newspaper roots to embrace new media enterprises. The company has histor...
Futuris owns a disparate range of rural businesses whose performance has been impacted by tough economic conditions in the sector. The company is currently undertaking a sale of non-core...
With the significant developments that management undertook in late 2008, combined with an environment of massive US government support, a very strong balance sheet and still profitable busine...
GE is a diversified technology, media and financial services company. Products and services cover a broad range of industrial applications. GE is made up of four business divisions; Technology...
Westpac is a well capitalised Australian major retail bank. The Bank has managed to avoid most of the bad debt and derivative problems incurred by its peers. Westpac's hybrids are amongst the most...
Goodman Group is one of Australia's predominant real estate investment trusts and fund managers with $18.6bn under management at 30 June 2008. After completing a sizeable capital raising and asset...
Seven is now effectively an asset play after selling its media assets into a joint venture in December 2006. At 30 June 2008, the company had approximately $2.5bn in cash and listed securities with...
Suncorp's recent trading performance has been poor and is likely to worsen due to increased bad debts in the banking book, higher claims expense for insurance due to storm damage, po...
Elders, has worked alongside rural Australia since 1839 and during this time has developed a realistic understanding of agribusiness. Over many years Elders supported...
Citigroup (Citi), the leading global financial services company, has some 200 million customer accounts and does business in more than 100 countries, providing consumers, corporations, governments...
JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of $1.6 trillion and operations in more than 60 countries. The firm is a leader in...
The American Express Company is a leading global payments and travel company. The Company's principal products and services are charge and credit payment card products and travel-related services o...
HBOS is the UK's largest mortgage and savings provider and the number one provider of new investment products. The Group is one of the UK's leading general insurers and has a reputation for excelle...
Telstra is Australia's leading telecommunications and information services company, with one of the best known brands in the country. They offer a full range of services and compete in all telecomm...
Royal Bank of Scotland (RBS) initially agreed to pay €27.2bn for a 38.8% share of the ABN Amro (AAB) business. It acquired the global wholesale business, North American business unit and ABN i...
Full year results to 31 December 2007 were better than guidance provided on 30 January 2008 on collapse of the deal. Despite widening margins on bonds, there was nothing sinister in...
Swiss Re is one of the world's leading and most diversified global re-insurers. The company operates through offices in more than 25 countries. Founded in Zurich, Switzerland, in 1863. The company...
FRN, Perpetual, Callable 26-Oct-2016 issue rated 2. Strong issuer but notched down due to significant level of subordination; perpetual issue with at least 9.5 years before potential issuer call; n...
An Australian Guide to Fixed Income
FIIG
