This morning, CDC Data Centres Australia launched a new dual tranche, fixed rate, senior secured bond issue including:
- A six year tranche with an indicative 6.329% coupon or 165 basis points over semi quarterly swap
- A 10 year tranche with a 6.841% coupon, 195 basis points over semi quarterly swap
The move comes after its successful $1 billion hybrid issue. At the time, KangaNews reported the deal attracted more than 200 orders across the two tranches and generated an A$5.8 billion orderbook, ranking among the largest achieved for an Australian corporate hybrid.
It’ll be interesting to watch the order book for this latest transaction. CDC is rated by Moody’s as investment grade Baa2, equivalent to BBB on the S&P scale.
US inflation fell faster than expected, down 0.4% for June to an annual 3.5%. The drop was the largest since April 2020. The largest declines came from energy and housing, while core inflation was flat at 2.6%.
According to Chris Iggo of BNB Paribas, the renewed Middle East hostilities could contribute to a swing back to higher inflation and this would not be good for bond investors. Iggo discusses inflation and its consequences for shares and bonds at length in this must-read article.
The domestic implications for higher inflation and rates are explored by Philip Brown from FIIG Securities. Brown draws from past cycle peaks and argues now might be a good time to consider adding duration.
Markets are priced for perfect execution according to Laura Cooper from Nuveen. The first half worked because shocks were spread out and absorbed by the market, the second half may not be so accommodating.
Finally, Calastone reports on growth in managed funds.
In other Australian corporate bond news:
- DWPF mandated a seven year senior unsecured fixed rate bond
- NAB raised $2.5 billion in a three year senior unsecured deal priced at 57 basis points over 3-month BBSW
- United Energy Distribution raised $400m in a senior unsecured five year fixed rate deal with a coupon of 5.497%
Hope you’re having a great week!
