With thousands of investors due to be paid out to around $800 million dollars in the next week, competition for available bonds will be fierce
AXA SA, the French life insurer has called its two Australian dollar denominated bonds. Funds are due to be repaid to clients today, Wednesday 26 October. While CBL, another insurer domiciled in New Zealand but which coincidentally also has business in France, has also called its FIIG originated bond. It is due to be repaid next Monday 31 October.
With thousands of investors due to be paid out circa $800 million dollars in the next week, competition for available bonds will be fierce.
Many of our investors have taken profit on the AXA bonds over the years, with most of those trading in the last year. One of the benefits of exiting early was not to have the bonds maturing at the same time as everyone else and thus possibly providing better circumstances in which to reinvest.
The unfortunate coincidence of three bonds being repaid in less than a week will be the scramble for available bonds. If you have been thinking about realising some of your investments, now would certainly be a good time with demand likely outstripping supply.
That said if you are keen to reinvest a quick call to your dealer to let them know what you’re thinking will help them put in your order quickly and give you the best chance of securing available bonds.
Below are three tables suggesting some alternatives. The first is investment grade for those wanting to replace AXA which was also investment grade.
The second and third shows some high yield alternatives for CBL, including some USD bonds which remain popular.
Investment grade – Australian dollars
| Company | Call date | Maturity date | Bond type | Capital structure | Yield to maturity | Income/running yield |
| Suncorp subsidiary, AAI Ltd | 06/10/2022 | 06/10/2042 | Floating | Subordinated debt | 4.58% | 4.74% |
| Bank of Queensland | 10/05/2021 | 10/05/2026 | Floating | Subordinated debt
| 4.15% | 4.90% |
| Genworth Financial Mortgage | 03/07/2020 | 03/07/2025 | Floating | Subordinated debt | 5.03% | 5.15% |
| Members Equity Bank | 29/08/2019 | 29/08/2024 | Floating | Subordinated debt
| 4.25% | 4.40% |
| Qantas Airways Limited |
| 12/10/2026 | Fixed | Senior debt | 4.42% | 4.63% |
| Rabobank Netherlands AU | | 11/04/2024 | Fixed | Senior debt | 3.46% | 4.86% |
| Sydney Airport | | 20/11/2030 | Inflation Linked | Senior debt | 5.80% | 3.19% |
Rated high yield – US dollar bonds
| Company | Credit rating | Maturity date | Bond type | Capital structure | Yield to maturity | Income/running yield |
| Dell Inc | BB- | 15/04/2028 | Fixed | Senior debt | 5.98% | 6.50% |
| Navient Corp | BB- | 01/08/2033 | Fixed | Senior debt
| 7.26% | 6.68% |
| NCIG Holdings | B | 31/03/2027 | Fixed
| Senior debt
| 10.09% | 10.84% |
| TransAlta Corp | BBB- | 15/11/2022 | Fixed
| Senior debt
| 4.22% | 4.43% |
| Virgin Australia | B3 | 15/10/2021 | Fixed
| Senior debt
| 7.08% | 7.63% |
Unrated high yield – Australian dollars
| Company | Maturity date | Bond type | Capital structure | Yield to maturity | Income/running yield |
| Impact Group Aus | 12/02/2021 | Fixed | Senior debt | 7.86% | 8.35% |
| W A Stockwell | 29/06/2021 | Fixed | Senior debt
| 6.87% | 7.56% |
| Adani Abbot Point Terminal | 29/05/2020 | Fixed | Senior debt
| 6.78% | 7.03% |
| PMP Finance | 17/09/2019 | Fixed
| Senior debt
| 5.80% | 6.33% |
| SCT Logistics | 24/06/2021 | Fixed
| Senior debt
| 5.88% | 7.14% |
Note: Price are accurate as at 24 October 2016 but subject to change
Black = retail and wholesale investors; Red = wholesale only
Call options
Call options allow the issuer to repay the bond prior to the stated maturity date of the bond. This feature is called an option because the issuer has the right but not an obligation to repay the debt early. In this instance, the issuer has a call option over their issue.