Six XTBs added to ACBC suite

12-Nov-2015

By Darin Tyson-Chan

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Australian Corporate Bond Company (ACBC) has increased the number of exchange-traded bond units (XTB) it has listed on the ASX with the launch of six senior floating rate notes (floaters).

Bank of Queensland and NAB have issued two XTBs each with AMP and Suncorp-Metway being the other issuers, with associated yields ranging from 2.96 per cent to 3.32 per cent as quoted on 10 November.

The floaters represent the first XTBs to be launched over bank bonds.

The launch means XTB investors will have access to bonds where the coupon moves in line with a specified benchmark, such as the bank bill swap rate.

This aspect of the floaters means holders of these XTBs will receive greater return from interest rate changes as they will receive an increase in the coupon paid upon a rise in interest rates to compensate for the related drop in the bond price.

Coupons on the new XTBs will be paid quarterly until maturity and exhibit the same level of capital security as senior bonds, putting them ahead of subordinated or hybrid securities.

The floaters offer investors more flexibility than a term deposit as they can be sold at any time on the ASX and will provide higher returns than at-call cash accounts over time.

“We are excited about the potential opportunities these new XTBs can bring,” ACBC chief executive Richard Murphy said.

“XTB floaters are high-quality, capital-stable instruments that share many of the attributes of cash investments and the benefits of trading on the ASX,” he said.

The launch of the six floaters brings the total number of XTBs available on the market to 33 and follows the second tranche of XTBs released to the market earlier in November, which included higher-yielding bonds such as Qantas.

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