The average trading margin of ASX-listed notes and bonds fell back again this week, although this time the movement was a larger. The average was driven lower mostly by securities with 2018 maturities such as Westpac Notes (ASX code: WBCHA, -184bps), AMP Notes (ASX code: AMPHA, -126bps) and Crown Notes Series 1 (ASX code: CWNHA, -105bps).
Crown’s Series 2 Notes (ASX code: CWNHB) were picked recently by Bell Potter’s Damien Williamson and Barry Ziegler as their preferred secutrity in the sector. Their rationale is as follows: “Since being priced at a margin of 4.00% in March 2015, Crown has significantly de-risked, focusing operations on its casino monopoly in Melbourne and Perth, and its Barangaroo development in Sydney.” The company’s balance sheet ratios have dramatically changed as a result of the almost-elimination of the company’s debt after the sale of a 34.3% stake in Meclo and other assets.
The current 3 month BBSW rate is around 2.12%. Add the trading margin from the above chart or from the tables to 2.12% 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% | 1.70% | -0.19% | 102.25 | 5.80% |
| AMP | AMPHA | Sub Note II | 18-Dec-18 | 2.65% | 1.88% | -1.26% | 100.45 | 4.75% |
| Australian Unity | AYUHB | Unsub. Bond | 15-Dec-20 | 2.80% | 1.70% | -0.32% | 103.50 | 4.79% |
| Crown | CWNHA | Sub Note | 14-Sep-18 | 5.00% | 3.82% | -1.05% | 100.45 | 7.10% |
| Crown | CWNHB | Sub Note | 23-Jul-21 | 4.00% | 3.66% | -0.32% | 101.25 | 6.05% |
| Bentham IMF | IMFHA | Bond | 30-Jun-19 | 4.20% | 3.23% | -0.10% | 102.30 | 6.25% |
| Nat Aust Bank | NABPE | Sub Note T2 | 20-Jun-23 | 2.20% | 1.88% | 0.06% | 101.62 | 4.25% |
| Peet | PPCHB | Bond | 5-Oct-22 | 3.65% | 4.28% | 0.03% | 103.03 | 6.66% |
| Qube Holdings | QUBHA | Sub Note | 5-Oct-23 | 3.90% | 2.72% | 0.11% | 106.50 | 5.72% |
| Suncorp-Metway | SUNPD | Sub NoteI T2 | 21-Nov-18 | 2.85% | 2.16% | 0.56% | 100.69 | 4.95% |
| Tatts | TTSHA | Snr. Bond | 5-Jul-19 | 3.10% | 1.96% | 0.54% | 102.30 | 5.16% |
| Villa World | VLWHA | Snr. Bond | 21-Apr-22 | 4.75% | 3.93% | 0.04% | 104.00 | 6.68% |
| Westpac | WBCHB | Sub Note T2 | 22-Aug-18 | 2.30% | 0.29% | -1.84% | 100.68 | 4.40% |