Markets have sharply sold-off in response to the ongoing US-China trade stand-off, and renewed calls from both sides for additional tariffs on goods. However, defensive sectors such as Utilities and Infrastructure, which are less impacted, have performed well in comparison.

Australian PPP Recommendation Update May 19

We initiate our recommendation on Virgin Australia’s (VAH) AUD 8.075% notes due 2024. In addition, we change our recommendations on the company's 8.50% USD notes due 2019 and 7.875% USD notes due 2021. Further, we maintain our recommendation on Virgin's 8.25% AUD notes due 2023. Our credit outlook remains Stable.

The first four months of this year have seen corporate bonds rally strongly across the ratings spectrum. We believe that investors should consider using this rally to reduce exposure to CCC rated securities, which remain the most vulnerable to any correction.

One of the major four banks in Australia, National Australia Bank Limited (NAB), has announced its plan to potentially issue a new Australian dollar Tier 2 style bond. The 10 year bond, callable after 5 years, is expected to price competitively to where existing Tier 2 issues are currently trading.

ASX-listed data-centre provider, NextDC Limited (NextDC), has mandated NAB to arrange an increase to its AUD200m June 2022 floating rate notes.

As several bonds approach maturity or call dates over the coming few months, many investors could be exposing themselves to reinvestment risk and receiving lower returns by not reinvesting ahead of time. We look at the benefits of actively managing maturities and early redemptions to get the most out of bond portfolios.

Ausdrill Finance Pty Ltd, a wholly owned subsidiary of ASX listed Ausdrill Limited, has announced its intention to issue a new USD denominated senior unsecured bond. The timing and pricing of this bond have not yet been announced.

Eric Insurance reported a YTD 3Q19 (31 March 2019) unaudited net profit after tax of AUD1.52m, up from a net loss of AUD1.35m in the prior corresponding period. While the underlying credit quality continues to strengthen, Eric Insurance (and the general insurance industry) remains heavily exposed to regulatory uncertainty.

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

On 30 April 2019, The Geo Group Inc. (GEO, Company) announced 1Q19 results. Results were relatively strong with growth in revenues, net income and funds from operations (FFO) on the prior comparative period (PCP), stemming from higher utilisation rates.

Mineral Resources Limited (MRL, Company) was founded in 1993 and is headquartered in Applecross, Australia.

On 15 April 2019, global aviation services provider Bristow announced it had obtained waivers on its covenants with certain secured lenders to further delay the release of its 10-Q quarterly report for the quarter ended 31 December 2018. Following the announcement, S&P downgraded the credit rating on both Bristow’s unsecured and secured notes and Moody’s also downgraded Bristow’s corporate family rating and the rating on its notes.

With uncertainty and volatility set to continue for some US high yield credits, now is the time to be reviewing and diversifying this part of portfolios. The recent recovery in price allows holders to reduce some positions and de-risk their USD high yield portfolios.

Privium Group (Privium, Company – formerly Impact Group Aus Pty Ltd) was founded in 1996 and has grown to become one of Queensland’s largest residential home builders.

Downer Group Finance (Downer) has launched a new fixed coupon AUD issue, with an indicative coupon of [3.75]%, maturing in 2026. It has priced tighter than recent peers, which reflects the strong demand for investment grade bonds in the current market environment.

The recently announced Woolworths green bond has opened up a discussion within the FIIG client base on ethical bond investments. Here we take a look at what’s on offer in this space.