Villa World has announced the margin on its Villa World Bonds (ASX code: VLWHA) offering after the bookbuild was closed early due to what the company described as “strong demand”. As expected, it was at the bottom of the 5.75%-5.00% indicative range. When this margin is added to the current 3 month bank bill swap rate (BBSW) of 1.795%, investors can expect around 6.55% annualised for the first quarter and thereafter if BBSW rates do not alter materially. BBSW is typically at a fairly small margin to the RBA’s official cash rate which is currently 1.50%.
The chart below shows the trading margins of existing notes which are already listed on the ASX. In very simplified terms, a security’s trading margin is the sum of its annualised distributions as percentage of its price less BBSW. (In practice, unrealised annual capital gains/losses and accrued distributions are also taken into account.)
