Given that the bias is heavily tilted towards further interest rate cuts – with the big banks predicting three more 25-basis point cuts between August and February – the Port of Newcastle’s new long-dated [high yielding] fixed rate note is expected to attract retirees looking for certainty of income.
Due to launch today (10 July) the Port of Newcastle is seeking indications of interest in a new 8-year Secured $A Fixed Rate note, which is currently being priced at a coupon of circa 6.475% and is expected to carry an issue rating of BBB (investment grade).
As Australia’s largest east coast deepwater port and a major gateway to international trade, the Port of Newcastle plays a pivotal role in Australia's economy by handling a wide range of cargo — from coal and bulk goods to containers and clean energy products.
It’s understood that the port contributes $71 billion to the Australian economy while handling over 166 million tonnes of cargo annually.
Important points for investors to consider:
- The port is actively investing in renewable infrastructure, targeting a 50% reduction in emissions by 2030.
- Historically, it has been reliant on coal (95% of volume) but is aiming to increase non-coal revenue to 50% by 2030.
- Only 50% of its shipping channel is currently used leaving significant underutilised capacity and room for growth.
- It is connected to major rail and road networks, making it ideal for container and bulk freight expansion.
- The port’s optimistic outlook is driven by its bold pivot from coal to clean energy and diversified trade.
As with all new issues of this calibre, scaling is possible, and pricing may tighten. However, current indicative pricing can be found below:
Pengana-Mercer launches more in P.C. space
Meanwhile, Pengana, in association with Mercer, recently launched several different global private credit vehicles, including:
The TermPlus online fixed-term accounts for retail investors: High-yield fixed-term investment accounts that target returns from 6.85% p.a. through unparalleled access to global private credit markets.
The listed Pengana Global Private Credit Trust (ASX: PCX): Offers access to typically institutional-only global private credit markets, diversified across strategies, sectors and geographies.
- Unit price: $2.020
- Net asset value (NAV) per unit: $2.03
- NAV: $166.4 million
- Minimum target cash distribution yield: 7% p.a.
The unlisted wholesale Pengana Diversified Private Credit Fund: Offers wholesale investors unparalleled access to a professionally constructed portfolio of high-quality global private credit investments.
Diversified global private credit separately managed account (SMA) fund: The investment objective of the fund is to generate strong risk adjusted returns via exposure to a diversified portfolio of global private credit investments, liquid credit investments and cash.
The Fund's Target Return to Investors is the RBA Official Cash Rate ('RBA OCR') plus 4% p.a. in Australian Dollars; generated over a rolling 3 year investment horizon.
Demographic shift to PC
According to Nehemiah Richardson, CEO of Pengana Credit the launch of these new funds recognises the demographic shift of more retirees and pre-retirees across the developed world towards more attractive income returns.
“The retirement bulge happening across the developed world is driving a hunger for more diverse sources of fixed income returns, as more investors target investments with a low correlation to traditional equities and bonds,” he notes.
“That need to add more stability to portfolios, by diversifying sources of fixed income, could see global private credit move from becoming a niche strategy to something considered a necessity.”
For Australian investors, Richardson compares the emergence of global private credit to the rise of global equities which they couldn’t easily access even 25 years ago.
Long-term structural changes to the banking system aside, he says a desire for unlisted investments with lower volatility has also fuelled global private credit.
“Similar doors are opening to global private credit, combined with structural long-term tailwinds which will see more growth in the sector and hence more investment options,” also notes.
“Since the GFC the frequency and amplitude of volatility in markets has only been increasing across world markets.
