Tuesday 28 June 2016 by Company research

Little Brexit impact on FIIG bonds

Given all the comments about Brexit and the largely negative impact on the global markets – lower equity prices and credit spread widening – we thought it would be useful to put together a summary that examined the exposure of FIIG originated bonds to the situation

Source: Cicero

As shown below, for most companies the impact is low, as operations are largely domestically focussed with only a small exposure to the UK or European markets.

While there is unlikely to be a material direct impact, in line with a general widening in credit spreads, all bonds have the potential to see secondary effects. In terms of FIIG traded bonds, we have generally seen these prices increase and lower yields, especially with regards to fixed rate bonds. There appears to be limited supply available in the secondary market and there has not been any signs of panic selling. However as many of these bonds are short dated with maturities generally five years or less, any spread widening could be used as an opportunity to add to favoured exposures.

Company	Revenue source	Brexit impact	Other
360 Capital	Australia. Property fund manager.	No direct impact.	N/A
Adani Abbot Point Terminal	Australia. Bulk coal port.	No direct impact.	Exposed to global coal markets.
Ansett Aviation Training	Australia. Flight simulator training.	No direct impact.	Expanded into Taiwan via JV however this is structured as a separate entity outside the Australian business.
Axsesstoday Group	Australia. Commercial equipment finance.	No direct impact.	N/A
Capitol Health	Australia. Medical diagnostic imaging.	No direct impact.	N/A
Cash Converters International	Australia and UK. Pawn broking and personal finance.	Low. CCV is selling its UK corporate stores and UK personal loan book. The UK division is loss making but may affect final sale price.	N/A
CBL Corporation Ltd	Headquartered in Auckland but 87% of its revenue comes from Europe. Insurance & reinsurance.	Low. CBL confirmed that Brexit is not expected to affect its European business.	May benefit with the group stating its received approaches to move business to its Dublin based subsidiary.
CML Group Ltd	Australia. Finance, payroll and recruitment servi	No direct impact.	N/A
Dicker Data Ltd	Australia, New Zealand. IT distributer.	No direct impact.	Exposed to minimal foreign exchange risk as most stock is purchased in AUD.
G8 Education Ltd	Australia & Singapore. Childcare centres.	No direct impact.	G8 sources capital in foreign markets for debt facilities, and so disruption to liquidity could impact their ability to access new lines.
IMF Bentham	Australia, US and a 50% joint venture domiciled in the Netherlands and operations there and the UK. Investigation, management and funding of litigation and arbitration claims.	Low. European JV exposure of AUD652k equity, Against FY15 NPBT of AUD9.2m.	Various currency exposures, primarily with respect to the USD.
Impact Group Aus Pty Ltd	Australia. House contstruction.	No direct impact.	N/A
Integrated Packaging Group	Australia, New Zealand, some Canadian exposure. Flexible manufacturing, industrial and agricultural packaging.	No direct impact.	Exposed to global commodity markets. On a net basis, a lower AUD is a positive for the company.
Mackay Sugar Ltd	Sells to the domestic or global sugar export market. Australian producer of raw sugar and related products.	No direct impact.	MSL's raw sugar is sold with revenues generally referenced to the international commodity price markets.
McPhersons Ltd	Australia & New Zealand. Health, beauty, consumer durable, household consumable products.	No direct impact.	MCP purchases some 63% of its product in USD. A strengthening USD/ weakening AUD would affect profitability.
Moneytech Finance Pty Ltd	Australia. Commercial finance.	No direct impact.	N/A
Plenary Bond Co	Australia. Sponsor of public private partnerships	No direct impact.	N/A
PMP Finance Pty Ltd	Australia and New Zealand. Catalogue printing and letterbox delivery.	No direct impact.	N/A
SCT Logistics	Australia. Rail freight operator.	No direct impact.	N/A
Stockwell Group	Australia. Diversified property group.	No direct impact.	N/A
Sunland Capital Pty Ltd	Australia. Property development.	No direct impact.	N/A