Tuesday 20 March 2018 by FIIG Research Trade opportunities

It’s March madness as we add five new DirectBonds

Don’t miss out on the latest additions to the DirectBond list. Department store J.C. Penney and telecommunications companies Frontier and Sprint are back with new USD issues. The other two DirectBonds offer exposure to the Australian and Asian financial services sector


Please note indicative yields are accurate as of 20 March 2018, subject to change and are available to FIIG wholesale clients only. For more information on any of the bonds below, please call your relationship manager.

Pioneer Credit

Pioneer Credit (Pioneer) is an Australian financial services provider with 180,000 customers across Australia and New Zealand. Headquartered in Perth, the company was listed on the Australian Securities Exchange in May 2014 (ASX:PNC). Pioneer specialises in acquiring and servicing unsecured retail debt portfolios as well as introducing brokered personal credit and loan products.

Pioneer has established relationships with Australia’s major banks and financial institutions to provide a range of products and solutions to help clients achieve their financial goals. The company works closely with customers experiencing financial difficulty, usually through a significant life event such as loss of job, serious health issues, marriage breakdown or domestic violence. A key goal at Pioneer is to help customers recover financially and evolve as a ‘new consumer’.

Pioneer’s primary business, Pioneer Credit Solutions, involves the acquisition and servicing of unsecured consumer retail portfolios consisting of individuals with financial obligations to the company. This business accounted for materially all of Pioneer’s customer payments revenue in FY17. Its Credit Connect business was launched in late 2016 that is centred on extending Pioneer’s relationship with customers beyond their initial account; providing customers with education and products to strengthen their financial health; and attracting new customers to Pioneer.

The company’s near term growth strategy is centred on increasing market share and responding to high yield purchased debt portfolio opportunities. Additionally over FY18, Pioneer will focus on growing the Connect business by expanding its financial product offering and increasing engagement with new customers. Pioneer’s half year 2018 results reported record cash generation and 60% increase from 1H17 and record half year net profits after tax of AUD8.1m, up 93% from 1H17.

The Pioneer Credit AUD 3mBBSW+5.25% March 2022 notes will issue on 22 March 2018.

Issuer Type Structure Maturity date  Rate  Payment frequency  Minimum investment 
Pioneer Credit Limited Floating Secured and subordinated medium term notes 22 March 2022 3mBBSW + 525bps Quarterly  AUD50,000

View the Pioneer Credit March 2021 Factsheet

DBS Group

DBS Group Holdings (DBSH) is the financial holding company of DBS Group. DBS Group is listed on the Singapore Exchange (SGX:DBS) and operates through its sole operating subsidiary DBS Bank (DBS). DBS is a leading financial services group in Asia with over 280 branches across 18 locations. The bank is headquartered in Singapore and has a growing presence in Greater China, Southeast Asia and South Asia. At 15 March 2018, Singaporean state owned sovereign wealth fund Temasek was the largest shareholder of DBS at 29.3%.

Through its operating subsidiary DBS, DBSH provides a range of financial services, mainly in Asia. DBSH’s main operating segments are consumer banking and wealth management, institutional banking, and treasury. In late 2017, DBS completed the acquisition of ANZ Bank’s wealth management retail banking business in Singapore, Hong Kong, China, Taiwan and Indonesia. The bank was awarded the “Safest Bank in Asia” by Global Finance from 2009 to 2015.

The DBS Group AUD 3mBBSW+1.58% March 2028 notes are rated A3 (S&P), available at YTW of 3.72%pa.

Issuer Type Structure Maturity date  Rate  Payment frequency  Minimum investment 
DBS Group Holdings Floating Unsecured subordinated notes (10 year non call 5 year) 16 March 2028 3mBBSW+1.58% Quarterly AUD10,000 

View the DBS March 2028 Factsheet

Frontier Communications

Frontier Communications Inc. (Frontier) is the fourth largest Incumbent Local Exchange Carrier (ILEC) in the US by revenue, after AT&T, Verizon and CenturyLink. Acquisitions of wireline and network assets from other US telecommunications companies have been a key feature of Frontier’s growth strategy.

  • In 2010, Frontier acquired Verizon’s local exchanges and related business assets in 14 states for USD5.2bn
  • In 2014, the company bought AT&T’s fibre network and triple play telecommunications services in Connecticut for USD2bn
  • Most recently in 2015, Frontier agreed to acquire Verizon’s wireline operations in California, Florida and Texas for USD10.5bn

These acquisitions have enabled Frontier to grow to a business of significant scale, operating in 29 states with over 5.5 million customers, including over 4.4 million broadband subscribers. The 2015/16 acquisition of Verizon assets has been the most significant, adding over 2.2 million customers and has the potential to double Frontier’s revenues.

As at 30 September 2016, around 30% of Frontier’s footprint is served by newer fibre networks, with the remaining 70% served by traditional DSL networks. The scale and reach of Frontier’s network, coupled with targeted incremental investments, allow the potential for Frontier to evolve with the industry and maintain competitiveness versus incumbent cable companies.

The Frontier USD 8.50% April 2026 notes are available at YTW of 8.38%pa.

Issuer Type Structure Maturity date  Rate  Payment frequency Minimum investment 
Frontier Communications Corporation Fixed Second lien notes 1 April 2026 8.50% Semi-annually USD10,000

View the Frontier 8.50% April 2026 bond Factsheet

There is a range of other Frontier bonds available, to find out more please call your Relationship Manager.

J.C. Penney

J.C. Penney Corporation, Inc. (JCP) is one of the largest department store and e-commerce retailers in the US, operating over 870 department stores in 49 states and Puerto Rico, according to their website. The retailer sells family apparel and footwear, accessories, fine and fashion jewellery, beauty products through its Sephora concession, and home furnishings. In addition, its department stores provide customers with services such as salon styling, optical, portrait photography and custom decorating.

Since the beginning of May 2017, JCP has added 70 new concessions and completed 32 expansions to its best-in-class partnership with Sephora. The company is also growing its appliance showrooms and seeing positive sales momentum alongside the repositioning of its apparel business, with most categories seeing positive comparables despite a difficult market.

The JCP USD 8.63% March 2025 notes are rated B (S&P), available at YTW of 8.81%pa.

Issuer Type Structure Maturity date  Rate  Payment frequency  Minimum investment 
J.C. Penney Corporation, Inc. Fixed Second lien notes 15 March 2025 8.625% Semi-annually USD10,000

View the JCP March 2025 Factsheet

The JCP USD 5.88% July 2023 bond is also available, rated BB- (S&P) at YTW of 6.28%pa.

Sprint Corporation

Sprint Corporation (Sprint) is one of the largest wireless communications companies in the US, offering a comprehensive range of wireless and wireline communications products and services. These services are designed to meet the needs of individual consumers, businesses, government subscribers, and resellers.

Sprint offers services to subscribers in all 50 states, Puerto Rico, and the US Virgin Islands. These networks offer subscribers differentiated products and services whether through the use of a single network or a combination of these networks. Sprint Prepaid primarily serves as a complementary offer to Sprint’s postpaid offer for subscribers who want plans that are affordable, simple and flexible without a long term commitment. In comparison, Boost Mobile primarily serves subscribers that are looking for value without data limits. Virgin Mobile primarily serves subscribers that are looking to optimize spend but need solutions that offer flexibility through various plans with high speed data options.

The Sprint USD 7.875% September 2023 notes are rated B (S&P), available at YTW of 6.63%pa.

Issuer Type Structure Maturity date  Rate  Payment frequency  Minimum investment 
Sprint Corporation Fixed Senior unsecured 15 September 2023 7.875% Semi-annually USD10,000

View the Sprint September 2023 Factsheet

The Sprint USD 7.625% February 2025 is also available, rated B (S&P) at YTW of 7.22%pa.

Earn over
6% pa* with Corporate Bonds

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