FIIG Research

Axsesstoday (AXL) announced its proposed capital raising has been placed on hold. If AXL does not resolve its total indebtedness breach by 28 February 2019, the previous waiver will no longer be valid and AXL will again be in breach of its indebtedness covenant. Unless AXL enters into voluntary administration, any outstanding default not waived would not, in and of itself, prevent it from paying interest when due.

Incitec Pivot is road showing ahead of a potential AUD deal. It is likely to be met with strong demand as there are only a limited number of IG bonds issued by non-bank corporates available in AUD.

Eric Insurance reported a YTD 1H19 (31 December 2018) unaudited net profit after tax of AUD1.09m, up from a net loss of AUD0.90m in the prior corresponding period, and ahead of our expectations. While the underlying credit quality continues to improve, Eric Insurance (and the general insurance industry) remains heavily exposed to regulatory uncertainty.

On 19 February 2019, global offshore contract drilling service provider Transocean Ltd, reported its 4Q18 and full year results.

An update on Virgin Australia following a ratings upgrade on the unsecured notes.

Glencore’s decision to cap coal production and uncertainty around continued coal export to China have created concerns for the Australian coal sector but we don’t believe there’s any long-term risk to the main coal export terminals.

Maurice Blackburn (MB) reported 1H19 results which were in line with our expectations. We reiterate our Market Perform recommendation on MB’s 2022 notes. While we expect leverage has peaked and should now begin to reduce, this is as expected and therefore our credit outlook remains Stable.

The long-awaited Royal Commission final report was released without any new damning information. Despite weaker than expected earnings from both companies, their respective sub debt notes remained stable with minimal impact on credit quality. However, it was a different story for shareholders.

AMP Limited (AMP) reported NPAT of AUD28m in FY18, down from AUD848m last year. Profitability was impacted by the Royal Commission and losses from its life insurance operations, which is scheduled to be sold later this year. Earnings from continuing operations were sound and provide a solid base moving forward, while capitalisation remains strong.

New issue alert - Liberty

New issue alert - Virgin Australia

As Sprint & T-Mobile take their case to Congress, it remains unknown if the merger will be approved. For existing bond holders, current pricing presents an attractive exit level, or an opportunity to await the outcome with further upside.

Virgin Australia’s strong 1H19 results make the three bonds issued by the company compelling investment options in high yield.

Ovato Ltd (Ovato, Group), formerly PMP Limited, is the largest integrated print and distribution company in Australia and New Zealand, producing catalogues, magazines, newspapers and books. The company has been listed on the ASX since 1991. Ovato Print’s production plants are located strategically in major cities. The company offers letterbox distribution of catalogues and newspapers direct to households through its Ovato Distribution business and magazine distribution directly to retail outlets through its Gordon & Gotch business.

Labor’s proposed changes to imputation credit will impact total income derived from hybrids. Investing in a portfolio of bonds, with unfranked cash distributions will protect against this loss of income.

We change our recommendation on Virgin Australia’s 8.50% USD notes due 2019 and reiterate our recommendations on the company’s 7.875% USD notes due 2021 and 8.25% AUD notes due 2023 following the release of the 1H19 results.

General Motors Financial Company has announced an inaugural 4 year AUD transaction.

Sydney Airport – Updated recommendation

Merredin Energy – Downgraded recommendation.