Credit
Credit Strategy: Red-hot A$ corporate hybrids
While additional Tier 1 bank hybrids are being phased out by 2032, investors have been piling into corporate hybrids with their ears pinned back. Possibly by default, corporate hybrids have been arguably the hottest A$ credit market in 2025, with the universe having reached A$10 billion across over 20 individual instruments since the start of its renaissance in late 2024. Demand appears to be showing no signs of slowing down with the market’s latest transaction, Ampol’s (ALD) 30NC8, attracting a $3.39 billion orderbook (~6.8x coverage). However, it has by no means been all smooth sailing throughout this period, with A$ corporate hybrid spreads unwinding 40-60bps (to ~250bps on average) in response to the Trump Administration’s “Liberation Day” in April 2025. It’s also worth noting spreads at even wider levels historically with ALD and Ausnet (ANV) instruments trading in excess of 300bps for most of the 2022/23 period. ANV’s existing +2.25% Nov-30/55 (5 years ttc) is currently priced at +175bps, which compares to its now called +3.10% Oct25/80, which reached +169bps in Sep-21 (4-years ttc). This is despite ANV's subordinated debt being rated one notch higher at the time. A$ corporate hybrids appear to be trading
SEC’s Atkins downplays private credit risk
United States Securities and Exchange Commission Chairman Paul Atkins said he does not consider private credit a systemic risk, signalling a continued willingness by regulators to support activity in the rapidly growing market. “I view the private markets as very important,” Atkins told a Managed Funds Association conference in New York, underscoring the SEC’s stance that private capital remains a key component of the financial system. Private credit has surged in size since the 2008 financial crisis, partly due to stricter lending rules imposed on traditional banks. The US$1.7 trillion (A$2.58 trillion) market has drawn scrutiny from policymakers and regulators concerned about opaque valuation practices and potential leverage risks. The Government Accountability Office is currently examining the sector’s risks and its broader economic impact, with the SEC contributing to the study. “This administration’s view — from all of us in the financial services regulatory sphere — we don’t view the private markets as being systemically important,” Atkins said on Tuesday, while acknowledging there are “blips here and there”. Private credit investment has traditionally been limited to institutional players and wealthy inves
AFIC considers share buy-back to reduce discount
Australia’s oldest listed investment company, Australian Foundation Investment Company (AFIC), is considering buying back its own shares to try to reduce the discount that they are trading at to net tangible assets (NTA). Chief Executive Officer and Managing Director Mark Freeman said AFIC was trading at a discount to NTA, like the vast majority of LICs, with the gap being 12% at 30 June. He said AFIC conducted an on-market buyback earlier this this year to neutralise the earnings dilution of its dividend reinvestment program. “It's probably something that we could consider this time around again if we go to a very large discount. So that's always open for discussion,” Freeman said on a webcast to discuss its 2025 financial year results. Earlier AFIC announced a 3% drop in net profit to A$285.0 million (US$187.6 million) on revenue from operating activities which eased 1.9% to $328.1 million in the 12 months to 30 June 2025. Freeman said AFIC swung from trading at a huge discount to NTA to a huge premium during the COVID pandemic. “But you can see back to the slide over the long term, it does tend to trade closer to fair value,” he said. Freeman also said AFIC, which has a small part of its portfolio invested
Deposit-only loans woo high earners short on liquidity
They say money talks, and when you’re earning more of the ‘folding stuff’ than the average punter, you can get a leg up on a higher bracket property, even when your savings habits may not be great. A new fintech-backed product called Deposit Pro, launched by Australian firm Reaia, offers home buyers earning $250,000-plus or couples on $400,000-plus access to $2 million-$5 million properties who don’t have the cash to stump up with the typical 20% deposit. Reaia identified a niche in the market after witnessing the difficulty many young and upwardly mobile professionals experience – some earning as much as $500,000 annually – buying properties where they want to live rather than where they can afford right now. Reaia co-CEO Neil Smoli believes this growing cohort of high income yet cash-poor young professionals are being locked out of buying close to where they work because they’re stuck paying $50,000 to $80,000 a year in rent and/or repaying HECS student loans to boot. Deposit Pro, adds Smoli is designed to beat the ultimate deposit dilemma, when young professionals may do everything right yet still seemingly struggle to out-save the market. As a result, the longer it takes to amass a deposit the greater the deposi