The Bloomberg US Aggregate Bond Index is on track for its best performance since 2020. The index has returned about 6.7% this year, with returns fuelled by easing inflation and Fed Reserve interest rate cuts, and other factors. Apparently, investors are keen to secure income that remains well above levels from the past decade. While risks remain, as Fed officials are divided over the path of future interest rates and corporate bond spreads are tight.
Blerina Uruci, Chief US Economist from T. Rowe Price, believes the chances of a December Federal Reserve (Fed) cut are 50/50 after the FOMC revealed an unusual divide and concerns about upside risks to inflation that weigh on hawkish members.
Chief Global Strategist, Seema Shah from Principal Asset Management, discusses the US neutral Fed Funds rate and the Fed’s next move.
In other bond market news:
- US investment-grade bond sales have reached US$1.499 trillion, beating last year’s total, making it the second-highest annual issuance on record
- US convertible bond sales reached a record US$108.7 billion with DoorDash, GameStop and Bloom Energy issuing sizeable deals.
Our lead article this week is from Ed Goldstein of Coller Capital discussing the growing market for secondary private market securities. Goldstein argues it’s a sign of an evolving market, and there are benefits for investors who get a good look at how loans have performed and ‘diversification at a discount’.
Bloomberg has announced the expansion of its Australian evaluated pricing service BVAL, including the addition of 600 Australian ABS securities, taking the total to 2,200.
BlackRock has announced its first Australian actively managed fixed income fund, while Betashares has expanded its platform and now includes two JP Morgan funds.
And, Betashares has announced an expansion of its Betashares Direct investment platform through a collaboration with J.P. Morgan Asset Management.
In Australian corporate bond issue news:
- EnBW International Finance is taking indications of interest for a six and 10.25-year fixed-rate senior unsecured deal. Price guidance is 125 basis points over semi-quarterly swap and 155 basis points over semi-quarterly swap, respectively
- Agricultural Bank of China Sydney Branch has launched a five-year senior unsecured floating rate bond with price guidance of 77 basis points over 3-month BBSW
- Bank Australia has launched a three-year senior unsecured floating rate bond with price guidance of 105 basis points over 3-month BBSW
- AMP has priced a $250m one-year senior unsecured deal at 65 basis points over 3-month BBSW
- Southland Building Society, trading as SBS Bank has priced a $200m three-year floating rate note at 130 basis points over 3-month BBSW
- Transgrid has priced a $300m floating 30NC5.25 and a $500m fixed to floating 30NC10 subordinated deal at 180 basis points over 3-month BBSW and 195 basis points over semi-quarterly swap, respectively
- Tabcorp has mandated a 5.5-year senior bond
- Shinhan Bank is taking indications of interest for a five-year floating rate senior unsecured kangaroo bond. Price guidance is 85-90 basis points over 3-month BBSW
- Westpac has priced a $750m three-year senior unsecured bond at 77 basis points over 3-month BBSW.
Have a great week!
