In an Australian first, NextDC has launched a $1 billion, 100-year, non-call 5 hybrid deal.
The initial coupon is 7.5% but this steps up after five years to 9.2% with further incremental step ups and a further 5% at the end of year 10, practically guaranteeing the hybrid will be repaid at the earliest opportunity, assuming the company continues to operate, and we don’t go into an outrageous inflation, rate hike spiral.
According to the press, Canadian pension funds have bid for the lot, compelled by the attractive fixed rate and convinced the company will be able to repay.
It’s really difficult to position a portfolio, let alone know where to invest when the world is so unsettled. This week we bring you a range of suggestions. Locally, Jon Lechte from Income Asset Management goes into some depth to explain why he views Tier 2 subordinated debt as attractive.
Across sub asset classes, Chris Iggo from BNP Paribas has little to recommend and a couple are flashing red. Check out the table in this article.
Nuveen’s Anders Persson is constructive on global bond markets and lists his best ideas. He says US Treasuries offer poor relative value and while seeing signs of stress in private credit, he still sees opportunities, amongst other prospects.
The popular Australian Economic View is back from Emma Lawson at Janus Henderson. This month, Lawson focuses on energy shock phases. The note puts oil prices and interest rates into perspective.
According to Joe Unwin from Apostle Funds Management, private credit isn’t as bad as the headlines suggest. There’s growing dispersion between managers and you need to choose carefully, but like Persson above, Unwin believes it’s less about the environment now and more about selecting the right manager.
Finally, we have an educational article comparing traditional and alternative assets from Global Citizen Solutions.
Have a great week!
