With the ASX200 nudging new all-time highs, investor interest in de-risking is being reflected in the growing interest fixed fixed-income offerings.
Unsurprisingly, bond issuers are only too keen to ‘feed the ducks while they’re quacking’ and are responding in kind - which has seen a constant stream of new products come to market.
Last week, ANZ Bank (ASX: ANZ) surprised the market, marketing the first of its kind – a 20-year Tier 2 subordinated debt bullet: A one-off maturity date after 20 years.
It was part of a dual tranche offering along with a 15-year, non-call 10(15NC10) tranche.
Unsurprisingly, the response was overwhelming with bids exceeding $5.5 billion, with ANZ issuing $1.5 billion – $750m for each tranche.
Investors preferred the 20-year bullet, which garnered $3.12 billion in bids.
ANZ revealed that more than 100 investors competed for the bullet alone.
Margins tightened from 180 basis points (bps) over semi-quarterly swap for the 15NC10 and 200bps for the bullet to 168bps and 180bps, respectively.
The bullet was especially attractive with the yield equivalent to 6.17%.
The deal extends the major bank subordinated debt yield curve and paves the way for further long-dated bullet issuance.
There was one other interesting new bond last week.
The Republic of Indonesia (rated BBB by S&P Global) issued $800 million in a senior unsecured dual tranche transaction:
- A five-year tranche with a 4.4% coupon or 90bps over semi-annual swap
- A 10-tranche with a 5.3% coupon, 135 bps over swap.
Yesterday, the RBA Monetary Policy Board cut the cash rate by 25bps to 3.60% in a unanimous decision.
Meantime, this week, there are three new developments:
- CBA has launched Private Wealth Advantage where investors can choose their own investments, including over-the-counter bonds.
- Perpetual Asset Management has launched a new diversified Active ETF (ASX: DIFF)
- Challenger Investment Management has announced plans to launch a new ASX-listed, fixed-term investment paying monthly interest.
