04 Apr – 08 Apr 2016

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Australian Unity’s ASX listed bonds (ASX Code: AYUHA) were suspended from trading on Monday April 4th and are to be redeemed on 14 April.

The median trading margin for ASX-listed floating rate notes and bonds was steady at 2.86% but a look at individual issues throws up a couple of outliers (Crown’s two series of notes have been removed ).

trading-8apr

Crown’s two series of ASX listed notes have been under pressure since November 2015 when speculation arose regarding a privatisation by James Packer and / or his associated companies. After Crown held its semi-annual debt investor tele conference, Evans & Partners’ credit analyst Harry Dudley thinks if such an event were to take place Crown would call both series based on the following reasons:

  • Given the restrictions on the levels of debt placed on Crown by the Victorian Government’s license agreement, Crown needs to be mindful about would how much debt and what type of debt it has on issue. Senior debt would be cheaper than hybrid debt.
  • Both hybrid prospectuses make specific to maintaining Crown’s credit profile and maintaining interest coverage ratio greater than 2.5 times and its leverage ratio less than 5.0 times
  • Crown’s CFO noted the notes are relatively expensive due to the “equity credit” gained from the rating agencies. If this equity credit was no longer required after privatisation it would be another reason to replace the notes with ordinary debt.
  • The presence of mandatory interest deferral and dividend stopper clauses would complicates future dividend payments to Crown shareholders if debt levels were not maintained within certain limits. Doing away with the notes would remove constraints on future payment of dividends to shareholders
  • Keeping the notes on issue requires constant disclosure due to their ASX listing and Packer/CPH would need to disclose financial information.
  • While disregarding credit investors may be profitable, Crown is likely to wish to remain a good corporate citizen by sticking with convention and calling the notes on the first call dates. Keeping the notes on issue requires constant disclosure due to their ASX listing and Packer/CPH would need to disclose financial information.

 
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ASX LISTED FLOATING RATE NOTES

COMPANY
$100
Face Val
CODEBOND
TYPE
MATURITYISSUE
MARGIN
TRADING
MARGIN
Δ WEEKWEEK
CLOSE
YTM
Est**
AGLAGLHASub Note8/06/20193.80%3.27%-0.19%102.005.74%
AMPAMPHASub Note II18/12/20182.65%2.06%-0.01%101.724.36%
ANZ Banking GroupANZHASub Note II14/06/20172.75%1.71%-0.02%101.404.01%
APT PipelinesAQHHASub Note31/03/20184.50%3.03%-0.21%102.855.52%
Australian UnityAYUHBBond15/12/20202.80%2.18%-0.25%102.504.72%
ColonialCNGHASub Note31/03/20173.25%1.80%-0.27%101.454.35%
CaltexCTXHASub Note15/09/20174.50%3.01%0.14%102.455.14%
CrownCWNHASub Note14/09/20185.00%12.91%0.77%84.6114.42%
CrownCWNHBSub Note23/07/20214.00%11.34%0.28%73.4613.34%
Goodman GroupGMPPASub Note30/09/20183.90%4.39%0.06%98.996.61%
Bentham IMFIMFHABond30/06/20194.20%4.54%-0.13%99.006.95%
Nat Aust BankNABHBSub Note II18/06/20172.75%1.81%0.12%101.323.97%
OriginORGHASub Note22/12/20164.00%5.82%0.16%99.047.93%
Suncorp MetwaySUNPDSub Note III21/11/20182.85%2.89%0.16%100.515.01%
TabcorpTAHHBSub Bond22/03/20174.00%2.86%-0.27%101.305.41%
TattsTTSHASnr. Bond5/07/20193.10%1.78%0.06%104.004.00%
WestpacWBCHASub Note II23/08/20172.75%1.67%-0.20%102.004.14%
WestpacWBCHBSub Note III22/08/20182.30%2.77%-0.06%99.485.11%
WoolworthsWOWHCSub Note24/11/20163.25%1.81%-0.41%101.494.50%

ASX LISTED CONVERTIBLE NOTES

COMPANYCODEFACE
VALUE
MATURITYWEEK
HIGH
WEEK
LOW
WEEK
CLOSE
YTMSIZE
($m)
Aust FoundationAFIG$100.0028/02/2017110.50109.06110.507.21%$3.13 on 19 Aug 2016 (E)
Peet GroupPPCG$100.0016/06/20160.000.00101.0017.65%$4.75 on 04 Jun 2016 (A)

ASX LISTED FIXED RATE BONDS

COMPANYCODETYPEMATURITYCOUPONWEEK
HIGH
WEEK
LOW
WEEK
CLOSE
YTMNEXT DIV
AND EX
DATE
Heritage BSHBSHBSnr Bond20/06/20177.25%104.39104.00104.394.03%$1.813 on 9 Jun 2016 (E)

** YTM for floating rate securities is an estimate using current interest rates. This will vary if rates change.
Source: Evans & Partners. Dealing Contact Michael Saba +61 3 9631 9813

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