Increased XTB suite provides diversification


By Elizabeth Somerville

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Australian Corporate Bond Company (ACBC) has released its third tranche of exchange-traded bonds (XTB) for November, bringing the total number of XTBs on offer to 33.

The latest tranche of four fixed-rate XTBs, released today, has expanded the range of bank bond exposures available to retail investors and has seen a senior bond from each of Bank of Queensland and National Australia Bank (NAB) added to the suite of XTBs.

Senior bonds from Coca-Cola Amatil and Sydney Airport have also been added.

ACBC chief executive and co-founder Richard Murphy said the range of XTBs on offer now included offerings from the banking, mining, property, transport and infrastructure, entertainment, energy, manufacturing and telecommunications sectors.

“Corporate bonds offer an important way for retail investors to diversify their investment portfolios, bringing capital stability and certainty of income,” Murphy said.

“The expansion of XTBs on offer over recent weeks strongly reinforces our commitment to opening the corporate bond market up to retail investors and allows investors to pick and choose the bonds they wish to gain exposure to.”

ACBC launched its initial tranche of 17 XTBs in May and since then has released two additional series of XTBs over fixed-rate corporate bonds and one series of XTBs over senior floating rate notes (floaters).

The floaters, which were launched earlier this month, represented the first XTBs to be launched over bank bonds and they give investors access to bonds where the coupon moves in line with a specified benchmark, such as the bank bill swap rate.

Holders of these XTBs would receive greater return from interest rate changes as they would receive an increase in the coupon paid upon a rise in interest rates to compensate for the related drop in the bond price.

Bank of Queensland and NAB have issued two XTB floaters each, with AMP and Suncorp-Metway being the other issuers.

In addition, Murphy said the wide range of XTBs currently on offer would allow investors to access transparent and liquid defensive asset classes that provided capital stability and predictable income, which was important with ongoing market uncertainty.

“For those who need greater diversification and fixed income defensive assets to balance their equity growth assets, or those who want to better balance their risk/return profile, it could be the perfect time to explore XTBs,” he said.

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