ACBC says more XTBs on the horizon

ACBC has several new exchange-traded bonds in the pipeline.


By Elizabeth Somerville

Email Article Print Article

The Australian Corporate Bond Company (ACBC) has revealed it plans to launch a fifth and sixth tranche of exchange-traded bonds (XTB) as volatility spurs more investors and advisers to consider these products in order to access capital stability and generate a greater certainty of income.

In an interview with financialobserver, ACBC chief executive and co-founder Richard Murphy said the group was in the planning phase for tranches five and six, which would be released in the first half of the year.

“[The tranches] will contain securities and bonds we haven’t been able to cover in the past and will include a combination of fixed [interest bonds] and floaters [floating senior rate notes],” Murphy said.

Currently, the group has 33 XTBs available to the market, which he said were increasing in interest among advisers and investors due in part to recent market volatility, but also as people became more familiar and comfortable with the products.

“As volatility has been increasing month-on-month, we’ve certainly been getting more independent financial advice groups coming back and saying they are getting their heads around [XTBs] and can see the capital stability they offer,” he said.

“This time last year advisers were asking ‘how do I get more yield?’, but now as volatility has resulted in bonds beating equities two years in a row, that has caused people to ask not just about yield and income on a security, but also the capital price.

“Yield is still there, but now we’re getting asked: ‘Where do I get yield in a more cautious environment?’”

XTBs offered a more capital stable option and were just a step above cash when it came to the volatility factor they carried, which in combination with the group’s continuous education push had increased their popularity, he said.

To further boost education and understanding around XTBs, the group recently launched a new website with separate portals for advisers and investors, which provides enhanced features and tools to calculate the potential outcomes of investing in XTBs.

The website features a price calculator and a new cash-flow tool, which will assist advisers and investors in being able to track the returns of up to 10 XTBs during the life of their investment.

“Since launching in May last year, XTBs have attracted growing interest from both investors and advisers and we’ve been pleased to see strong traffic across our new investment tools,” Murphy added.

“In just the first few weeks of the website going live, we’ve seen a broad range of XTBs added to portfolios via our tools and calculators, indicating that both the tools and products are resonating well with the market.”

« Back to Articles