Trading margins of ASX-listed notes and bonds were considerably lower on average. The median trading margin fell by 31bps to 1.37% as a couple of securities’ trading margins fell noticeably.
Villa World Bonds (ASX code: VLWHA, -175bps) have been particularly volatile in the last three weeks, a period which happens to contain the ex-interest date (11 January 2018) and the payment date (22 January 2018). A quick analysis of prices over this period indicates participants in this market did not properly adjust for this latest interest payment.
Tatts Bonds (ASX code: TTSHA, -65bps) were redeemable at the option of holders registered before or on 24 January 2018, which probably accounts for their attraction early in the week. Now they are once again redeemable in July 2019, their trading margin ought to return to levels present in early January.
The current 3 month BBSW rate is around 1.79%. Add the trading margin from the above chart or from the tables to 1.79% for a gross return per annum in the absence of BBSW rate changes. The gross return may contain imputation credits. BBSW typically is around 15bps (average since 1990) more than the RBA rate.
ASX LISTED FLOATING RATE NOTES
| COMPANY | CODE | BOND TYPE | MATURITY | ISSUE MARGIN | TRADING MARGIN | Δ WEEK | WEEK CLOSE | RUNNING YIELD** |
|---|---|---|---|---|---|---|---|---|
| AGL | AGLHA | Sub Note | 8-Jun-19 | 3.80% | 1.08% | 0.20% | 104.40 | 5.39% |
| AMP | AMPHA | Sub Note II | 18-Dec-18 | 2.65% | 1.27% | 0.22% | 101.70 | 4.38% |
| APT Pipelines | AQHHA | Sub Note | 31-Mar-18 | 4.50% | 4.03% | 0.71% | 100.51 | 6.28% |
| Australian Unity | AYUHB | Unsub. Bond | 15-Dec-20 | 2.80% | 1.37% | -0.31% | 104.00 | 4.41% |
| Crown | CWNHA | Sub Note | 14-Sep-18 | 5.00% | 2.83% | 0.12% | 102.20 | 6.69% |
| Crown | CWNHB | Sub Note | 23-Jul-21 | 4.00% | 3.66% | 0.30% | 101.89 | 5.72% |
| Bentham IMF | IMFHA | Bond | 30-Jun-19 | 4.20% | 3.37% | 0.43% | 101.50 | 5.91% |
| Nat Aust Bank | NABPE | Sub Note T2 | 20-Jun-23 | 2.20% | -0.95% | -0.42% | 104.54 | 3.43% |
| Qube Holdings | QUBHA | Sub Note | 5-Oct-23 | 3.90% | 3.60% | 0.01% | 107.30 | 5.31% |
| Suncorp-Metway | SUNPD | Sub NoteI T2 | 21-Nov-18 | 2.85% | 0.99% | -0.23% | 102.34 | 4.56% |
| Tatts | TTSHA | Snr. Bond | 5-Jul-19 | 3.10% | 0.41% | -0.65% | 104.08 | 4.71% |
| Villa World | VLWHA | Snr. Bond | 21-Apr-22 | 4.75% | 2.20% | -1.75% | 104.45 | 5.98% |
| Westpac | WBCHB | Sub Note T2 | 22-Aug-18 | 2.30% | 0.97% | -0.10% | 101.48 | 4.05% |