Monday 25 May 2015 by Lincoln Tragardh Week in review

From the Trading Desk

Greece suggests inability to make its June International Monetary Fund payment, the US expects to start raising interest rates this year, the Australian yield curve continues to steepen, Qantas 2022 bonds became available to retail clients and two Sun Group Finance bonds are added to the DirectBonds list

Economic wrap

Greece was in the headlines again this weekend, with Prime Minister Alexis Tsipras commenting that the country cannot absorb any more austerity measures and Interior Minister Nikos Voutsis stating that the country couldn’t and wouldn’t make the June payment to the International Monetary Fund  (IMF) without a deal from its creditors.

Mixed housing data and uninspiring CPI from the US, coupled with little surprise from RBA and FOMC minutes left for subdued movement in yields last week. Janet Yellen indicated that, all else being equal, interest rates are expected to rise in the US this year – which was no real surprise to markets.

This week, the US releases GDP on Friday – which is expected to shrink by 0.9% (annualised Quarter-on-Quarter). Domestically, there is little in the way of releases this week.

In currencies last week, the Aussie dollar dropped against the US by 2 cents, opening at 80.26 US cents and finishing the week at 78.23 US cents.

Yields seemed to regain some stability last week, with 5 year government yields increasing by a modest 4 basis points to 2.28%. The steepening of the yield curve continued, with 10 year government yields outpacing the shorter end, up 9 basis points to 2.92%.


Trading late last week was dominated by Qantas, with the 2022 maturity becoming available to retail investors. As a result, we saw many retail clients selling out of their 2020 maturity and moving into the 2022s, to take advantage of the steeper yield curve and downside protections inherent in the longer dated bond, whereby the coupon steps up if the company is downgraded by the rating agencies. As of today, if you wanted to execute the switch you would have realised a pickup of circa 24 basis points (bps).

We also added two DirectBonds from Sun Group Finance, the funding subsidiary of the Transurban-led consortium which manages a network of Brisbane toll roads. On the menu is a 2021 fixed rate bond and 2024 floating rate note. We have been especially active in the longer dated floater. It represents a good opportunity to add a quality, investment grade name to your portfolio, without the interest rate risk inherent in fixed and inflation linked bonds of similar tenors. Indicative offer yields below:

  • Sungrp-4.90%-08Dec21          4.09%
  • Sungrp-BBSW+2.05%-16Dec24   4.82% (projected using a trading margin of 1.65%)

You can now download the factsheet’s for either Sun Group bond. Please note these bonds are available to wholesale investors only. The most recent Transparency Report is available here.

Rates accurate as at 25 May 2015 and are subject to change. All prices and yields are a guide only and subject to market availability. FIIG does not make a market in these securities. For more information, please call your FIIG representative or our general line 1800 01 01 81.


The contents of this document are copyright. Other than under the Copyright Act 1968 (Cth), no part of it may be reproduced or  distributed to a third party without FIIG’s prior written permission other than to the recipient’s accountants, tax advisors and lawyers for the purpose of the recipient obtaining advice prior to making any investment decision. FIIG asserts all of its intellectual property rights in relation to this document and reserves its rights to prosecute for breaches of those rights.

Certain statements contained in the information may be statements of future expectations and other forward-looking statements. These statements involve subjective judgement and analysis and may be based on third party sources and are subject to significant known and unknown uncertainties, risks and contingencies outside the control of the company which may cause actual results to vary materially from those expressed or implied by these forward looking statements. Forward-looking statements contained in the information regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. You should not place undue reliance on forward-looking statements, which speak only as of the date of this report. Opinions expressed are present opinions only and are subject to change without further notice.

No representation or warranty is given as to the accuracy or completeness of the information contained herein. There is no obligation to update, modify or amend the information or to otherwise notify the recipient if information, opinion, projection, forward-looking statement, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

FIIG shall not have any liability, contingent or otherwise, to any user of the information or to third parties, or any responsibility whatsoever, for the correctness, quality, accuracy, timeliness, pricing, reliability, performance or completeness of the information. In no event will FIIG be liable for any special, indirect, incidental or consequential damages which may be incurred or experienced on account of the user using information even if it has been advised of the possibility of such damages.

FIIG provides general financial product advice only. As a result, this document, and any information or advice, has been provided by FIIG without taking account of your objectives, financial situation and needs. Because of this, you should, before acting on any advice from FIIG, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If this document, or any advice, relates to the acquisition, or possible acquisition, of a particular financial product, you should obtain a product disclosure statement relating to the product and consider the statement before making any decision about whether to acquire the product. Neither FIIG, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice. Any reference to credit ratings of companies, entities or financial products must only be relied upon by a ‘wholesale client’ as that term is defined in section 761G of the Corporations Act 2001 (Cth). FIIG strongly recommends that you seek independent accounting, financial, taxation, and legal advice, tailored to your specific objectives, financial situation or needs, prior to making any investment decision. FIIG does not provide tax advice and is not a registered tax agent or tax (financial) advisor, nor are any of FIIG’s staff or authorised representatives. FIIG does not make a market in the securities or products that may be referred to in this document. A copy of FIIG’s current Financial Services Guide is available at

An investment in notes or corporate bonds should not be compared to a bank deposit. Notes and corporate bonds have a greater risk of loss of some or all of an investor’s capital when compared to bank deposits. Past performance of any product described on any communication from FIIG is not a reliable indication of future performance. Forecasts contained in this document are predictive in character and based on assumptions such as a 2.5% p.a. assumed rate of inflation, foreign exchange rates or forward interest rate curves generally available at the time and no reliance should be placed on the accuracy of any forecast information. The actual results may differ substantially from the forecasts and are subject to change without further notice. FIIG is not licensed to provide foreign exchange hedging or deal in foreign exchange contracts services. The information in this document is strictly confidential. If you are not the intended recipient of the information contained in this document, you may not disclose or use the information in any way. No liability is accepted for any unauthorised use of the information contained in this document. FIIG is the owner of the copyright material in this document unless otherwise specified.

The FIIG research analyst certifies that any views expressed in this document accurately reflect their views about the companies and financial products referred to in this document and that their remuneration is not directly or indirectly related to the views of the research analyst. This document is not available for distribution outside Australia and New Zealand and may not be passed on to any third party without the prior written consent of FIIG. FIIG, its directors and employees and related parties may have an interest in the company and any securities issued by the company and earn fees or revenue in relation to dealing in those securities.