FIIG Research

Over FY18, CFAP’s results were negatively impacted by drought in most of the agricultural regions in Eastern Australia (see further below). As a result, operating revenues were down 8.8% on the prior period, falling from AUD64.6m in FY17 to AUD58.9m in F18. EBITDA for FY18 was AUD33.7m, down 11.6% from FY17. Notwithstanding the negative impact of lower locomotive demand, CFAP’s revenue diversification strategy was beneficial in supporting the group while the leasing business has been affected due to the drought. We maintain our recommendation on CFAP’s 8.35% notes due 2020.

Earlier this week, Lucas TCS reported its 3Q19 results which trailed those that the company had prepared for the Explanatory Memorandum dated 8 April 2019 as part of its recent circulation resolution that was passed on 1 May 2019. Following a conversation with the company, we need to engage further to understand the reasons for this underperformance and gain greater clarification on the earnings outlook for the remainder of FY19 and beyond. In light of this, we have placed our recommendation on Lucas TCS' 8.00% notes due 2022 Under Review as we are unable to assess the relative value of the Notes compared to peers. We will reinstate our recommendation once we have gained clarity of the earnings outlook.

The RBA has explicitly stated that it is open to cutting cash rates as early as June 2019, so what does this mean for fixed income investors?

We provide and update following Ovato’s announcement of an equity capital raising. As a consequence, we have updated our FY19 guidance for the Company.

NEXTDC designs, develops and operates data centres in Australia. NEXTDC is an ASX200 company and is the only independent data centre operator with locations in Sydney, Melbourne, Brisbane, Perth and Canberra. The company was founded in 2010 and listed on the ASX later that year.

NEXTDC designs, develops and operates data centres in Australia. NEXTDC is an ASX200 company and is the only independent data centre operator with locations in Sydney, Melbourne, Brisbane, Perth and Canberra. The company was founded in 2010 and listed on the ASX later that year.

NEXTDC designs, develops and operates data centres in Australia. NEXTDC is an ASX200 company and is the only independent data centre operator with locations in Sydney, Melbourne, Brisbane, Perth and Canberra. The company was founded in 2010 and listed on the ASX later that year.

We provide an update following Bristow’s recent Chapter 11 filing.

We are reiterating our recommendation on Plenary Bond Co’s 6.50% notes due 2024 as we make this issue available to Retail investors. The credit outlook is Stable.

Markets have sharply sold-off in response to the ongoing US-China trade stand-off, and renewed calls from both sides for additional tariffs on goods. However, defensive sectors such as Utilities and Infrastructure, which are less impacted, have performed well in comparison.

Australian PPP Recommendation Update May 19

We initiate our recommendation on Virgin Australia’s (VAH) AUD 8.075% notes due 2024. In addition, we change our recommendations on the company's 8.50% USD notes due 2019 and 7.875% USD notes due 2021. Further, we maintain our recommendation on Virgin's 8.25% AUD notes due 2023. Our credit outlook remains Stable.

The first four months of this year have seen corporate bonds rally strongly across the ratings spectrum. We believe that investors should consider using this rally to reduce exposure to CCC rated securities, which remain the most vulnerable to any correction.

One of the major four banks in Australia, National Australia Bank Limited (NAB), has announced its plan to potentially issue a new Australian dollar Tier 2 style bond. The 10 year bond, callable after 5 years, is expected to price competitively to where existing Tier 2 issues are currently trading.

ASX-listed data-centre provider, NextDC Limited (NextDC), has mandated NAB to arrange an increase to its AUD200m June 2022 floating rate notes.

As several bonds approach maturity or call dates over the coming few months, many investors could be exposing themselves to reinvestment risk and receiving lower returns by not reinvesting ahead of time. We look at the benefits of actively managing maturities and early redemptions to get the most out of bond portfolios.

Ausdrill Finance Pty Ltd, a wholly owned subsidiary of ASX listed Ausdrill Limited, has announced its intention to issue a new USD denominated senior unsecured bond. The timing and pricing of this bond have not yet been announced.

Eric Insurance reported a YTD 3Q19 (31 March 2019) unaudited net profit after tax of AUD1.52m, up from a net loss of AUD1.35m in the prior corresponding period. While the underlying credit quality continues to strengthen, Eric Insurance (and the general insurance industry) remains heavily exposed to regulatory uncertainty.