Tuesday 31 March 2015 by Trade opportunities

Strong supply presents an opportunity

When we bring a new bond issue to the market, investors sell existing holdings to buy the new bonds. This means the supply available for resale increases presenting opportunities to invest

Subsequent to a new FIIG led issue, a significant supply of bonds becomes available as investors sell down holdings to participate in the new deals. This presents an opportunity for investors as a broad range of bonds become available including popular and tightly held issues. This is a particularly good time for new investors seeking to build a balanced portfolio given the broad spectrum of available bonds, as well and an opportunity to increase or add sought after names to your investments. Also of note is the large amount of bonds which classify as available to ‘retail’ investors. This is a good time for this segment (which cannot participate in new issues) to take advantage as other investors are selling down their retail investments to buy the new issue.

In the last three weeks FIIG has raised a total of $125m for three companies. This has resulted in excellent supply across most of our more popular bonds. The following table gives examples of what is indicatively available across fixed, floating and inflation linked bonds, including ‘retail’ bonds (in black text).

available bonds table

Source: Bloomberg, FIIG Securities
**Yield for Floating Rate Notes is the swap rate to Maturity/Call plus the trading margin
**Yield for ILB equals Real Yield plus a current inflation assumption of 2.5%.
RED: Must be a wholesale client to purchase these bonds
Yields and prices are indicative only and there is no guarantee as to their accuracy. FIIG does not make a market in the securities.

In simple terms, investors should take note when FIIG brings a new bond issue to market as supply in secondary trading tips in their favour and presents an opportune time to speak to their dealer about what is available.