Wednesday 07 November 2018 by Leigh Winton Sales commentary

From the trading desk

Markets rebound, softer domestic inflation, new issue from Lendlease, opportunistic USD buy and RMBS available.

 

AUD & USD

  • Lendlease launched a dual tranche 5.5 year and 10 year fixed coupon bond last week. The investment grade rated bonds are expected to pay semi-annual coupons of 4.25% and 5.20%, respectively, and looked attractive value for clients to participate in the primary market.
  • Barminco’s rating has been upgraded by three notches following the completion of its merger with Ausdrill. We view the 2022 USD bond as an opportunistic buy with possible further price appreciation likely.  It is offered to wholesale clients at an indicative yield to maturity (YTM) of 6.31%pa. 
  • The NCIG senior 2027 USD bond remains popular with wholesale clients, offering a relatively high yield for an investment grade rated bond. There is good ongoing supply at an indicative yield to worst of 5.59%pa.
  • There is ongoing demand for the Harvey 2018-1 Class C notes in the RMBS space.  The highly rated bond offers an attractive return.  It is available to wholesale investors at a margin of BBSW +2.37%. 

 Economic wrap

  • Fixed income and equity markets rebounded from lows last week, despite ongoing US-China trade tensions.
  • Australian inflation was softer in 3Q18, with core measuring 1.70% against 1.90% estimate.The lower read was due to cheaper electricity prices and childcare rebate changes.
  • US employment figures were solid for October, with an additional 250,000 jobs and the unemployment rate unchanged at a 49-year-low of 3.70%.

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