Wednesday 30 January 2019 by FIIG Securities FIIG Securities New issues list

New year - new DirectBonds

We are constantly adding to our DirectBonds list and while we settle back from holidays, here are our recent new DirectBonds, just in case you missed them! Two are for retail, three are USD denominated and there is a mix of investment grade and high yield

Perhaps you were one of the few that didn’t spend as much as you thought over Christmas and are now looking to invest?

Here are some relatively new DirectBonds that you may wish to consider.

AMP subordinated Tier 2 bond

The AMP group is Australia and New Zealand’s leading wealth management company, with an expanding international investment management business and a growing Australian retail banking business. The AMP group is focused on three main operating businesses: Australian Wealth Management, AMP Capital, and AMP Bank.  The Issuer of the notes, AMP Limited (AMP) is the non-operating holding company of the AMP group.

A key strength is its competitive position. AMP has a strong market position reflecting its significant market share and top ranking amongst peers in corporate and retail superannuation, and retail managed funds.

S&P highlighted that AMP also benefits from its significant share in retirement income and unit trusts. Earnings diversification across primary business lines--wealth management, asset management, and retail banking--continue to improve as the group targets stronger contributions from the asset management and retail banking business lines.

A significant risk is the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

The interim report was issued on 28 September 2018 and the Royal Commission is due to produce its final report no later than 1 February 2019. Recommendations flowing from the Royal Commission, if legislated, could have far-reaching implications, including the ability of financial conglomerates, such as AMP, to manufacture and distribute wealth management products, for example.   AMP has made a provision of AUD312m (c63% of 1H18 underlying profits) for the remediation of wealth management advice, some of which stemmed from findings in the Royal Commission. The group remains exposed to brand and reputation damage, including potential for further extraordinary costs (as well as potential for further loss of business). 

AMP bonds are for wholesale investors only from $10,000. FIIG clients can view the Factsheet here.

Centuria Capital No. 2 Fund – four bonds, both fixed and floating available

Centuria Capital No. 2 Fund (Centuria) is a 100% owned subsidiary of Australian ASX listed specialist investment manager, Centuria Capital Group. The issuer holds strategic equity investments in a number of listed and unlisted property investments, including Centuria Industrial REIT (ASX: CIP), Centuria Metropolitan REIT (ASX: CMA) and Propertylink Group (ASX: PLG). As at 30 September 2018, the market value of Centuria’s shares in these three funds was AUD305m. Accounting for the value of shares in unlisted funds, Centuria’s total assets were valued at AUD405m, equivalent to a loan-to-value (LTV) of 30.5%. Centuria currently has AUD125m of senior secured debt outstanding maturing in April 2021.

Centuria is guaranteed by Centuria Group an ASX listed specialist investment manager with AUD4.9bn in funds under management at the end of FY18. Centuria Group’s primary lines of business include property funds management – managing a portfolio of 16 unlisted funds, and two listed funds – and investment bonds, offering a range of investment products including tax effective bonds and prepaid funeral plans.

Centuria’s Capital No. 2 Fund has issued a range of bonds are for wholesale investors only from $10,000. FIIG clients can view the Factsheet here.

Elanor goes retail

Elanor Investors Group (EIG) is an Australian property funds management group with over AUD1bn of hotel, retail and office investment properties under management. EIG invests directly in various property opportunities, as well as indirectly via co-investments in the property funds it manages. EIG listing on the Australian Stock Exchange in July 2014 (ASX: ENN).

EIG has a level of diversity in terms of exposure. Based on the total FUM at of AUD1.1bn as at FYE18 EIG has a 43.9% exposure to retail, a 32.9% exposure to hotel assets and a 23.7% exposure to commercial assets.

Elanor’s bonds are available for retail and wholesale investors from $10,000. FIIG clients can view the Research Report here.

Fortescue Metals Group (FMG) USD 2022 and 2024 lines

FMG Resources is a wholly owned subsidiary of Fortescue Metals Group. Fortescue Metals Group (FMG) is an ASX listed iron ore production and exploration company based in Perth with a market capitalisation of AUD14.4bn as at 22 January 2019.

FMG has become Australia’s third largest iron ore producer and exporter, with the bulk of its exports going to China. It is the fourth largest iron ore producer globally and the company shipped 170 million tonnes of iron ore in FY17 and FY18. FMG has over 15 billion tonnes of iron ore resources, including over 2 billion tonnes of reserves (which would represent about 15 years’ production at current levels). The exploration region is a span of 85,000 square km in the Pilbara region of Western Australia. 

FMG's large production profile and low cost high quality reserves provide significant scale advantages and allows the company to generate substantial revenue and cash flow from operations.  FMG’s longstanding relationships with customers in China has grown from the first commercial shipment of iron ore in 2008 to the company now supplying 17% of China’s seaborne iron ore and expanding into Japan, South Korea and India.

USD denominated bonds are for wholesale investors only. These bonds are available in parcels from USD10,000. FIIG clients can view the Factsheet here.

Merredin goes retail

Merredin Energy owns and operates an 82 megawatt diesel powered peaking power station. It is located near the town of Merredin, 260km east of Perth. The power station is a modern state of the art peak generation facility accredited to receive 82 megawatts of capacity credits each year and has received this level since it was commissioned in 2012.

Merredin’s bonds are for retail and wholesale investors from $10,000. To see the Factsheet please here

Westpac subordinated Tier 2 USD bond with first call November 2026

Westpac is one of the four major banks that dominate banking in Australia. Profitability metrics are at the upper-end of global comparisons. The company is one of the top five companies by market capitalisation on the Australian Stock Exchange ($95.3bn 9 November 2018).

These bonds are for wholesale investors from USD10,000. To see the Factsheet please click here.

If you are not yet a client but are interested in investing in these bonds, or would like more information on becoming a client, please call Chris Ip on 1800 01 01 81.