Mercer International Inc. (Mercer, Company) was founded in 1968 and is headquartered in Vancouver, Canada.

In this week’s note we will take a look at negative yielding bonds and the implications for Australian bond investors.

On 10 September 2019, CML announced it had agreed to acquire Classic Funding Group, an Australian, privately owned company with over 25 years’ experience in providing equipment finance and invoice discounting.

New Issue Alert – Australian Unity simple corporate bonds

Many bonds have had strong runs in price over the last little while, as yields across the board have declined. One of the stronger price performances has been in the Plenary 6.5% 2024 bond issued in May 2018.

In investment grade Newcrest 2041 is the most widely held and has had the largest rally of these bonds. The bond yields 4.32% to maturity and has a modified duration of 13.3, which is a whole lot of interest rate risk.

On 5 September 2019, Bloomberg reported that Mallinckrodt PLC (Mallinckrodt, Company) has hired restructuring advisers. The hiring comes as Mallinckrodt looks to navigate near-term maturity and financial uncertainty from opioid litigation. The Company is currently exploring all strategic options, including filing for Chapter 11 bankruptcy protection.

Operating since 1997, Liberty is a diversified finance company with operations across Australia and, in more recent years, New Zealand.

As expected, Tier 2 issuance from Australian major banks is continuing to gather pace. With Commonwealth Bank of Australia (CBA) the latest to announce a Tier 2 note offering.

On 5 September 2019, CF Asia Pacific Group Pty Ltd (CFAP, Company) released its quarterly results for the period ending 30 June 2019.

The September 2019 update to our DirectBond List including new additions and our current Trading Restrictions list.

Share Trading Suspension Extended

While high yield bonds provide a healthy income stream, this higher yield comes with higher risk. Here we consider the risks associated with US high yield bonds.

Next Generation (Next Gen, Group) reported 1H19 results which were noticeably softer than 1H18, as revenue, EBITDA and NPAT were all affected by the lower membership count stemming from the sale of Perth South. In addition, the construction of the new Doncaster club continues to be delayed. As a result, we revise our recommendation on the Group's 7.90% senior secured notes due June 2023 due to our view of limited price upside in the near term.

On 28 August 2019, Virgin Australia (VAH) reported its full year results for the period ended 30 June 2019, reporting an underlying loss before tax of AUD71.2m reflecting the impact of adverse market conditions in 2H19.