FIIG - The Fixed Income Experts

News and Education

Mackay Sugar becomes available to retail investors

by Gavin Madson | Apr 08, 2014

Key points 

  1. Opportunity to diversify into the agricultural sector
  2. Backed by an ‘asset rich’ company
  3. Offers a strong 7.00% running yield (6.24% yield to maturity)

This week the Mackay Sugar Limited fixed rate bonds maturing in April 2018 became available to retail clients. Currently, this bond offers a strong running yield of 7.00% and a yield to maturity of 6.24%, along with Silver Chef, the best return available to retail clients whilst at the same time offering the opportunity to diversify into an asset rich company and gaining exposure to the agricultural sector.

On a relative value basis Mackay Sugar offers a strong argument to be added to retail portfolios offering a trading margin of 2.83%, similar to the margin available for Silver Chef, but with a shorter time to maturity. The next nearest margin on offer from a bond available to retail investors is from Southbank TAFE which trades over 1.00% inside Mackay Sugar.

Given the outright return opportunity provided by Mackay Sugar, retail investors should strongly consider adding Mackay Sugar to their portfolios now that it has become available.

The strength of the Mackay Sugar credit lies in the significant asset base of the company and the ready market for Australian agricultural assets in international markets. Full details of our view of the Mackay Sugar credit are available in our research report here.

Please speak to your FIIG representative if you are interested in any of those bonds.

All prices and yields are a guide only and subject to market availability. FIIG does not make a market in these securities.