FIIG said a number of forces were pushing the development of an Australian corporate bond market, including an increasing number of institutional investors looking to participate in bond issues.
“There are a range of trends converging, including a widespread realisation that superannuation funds (including self-managed superannuation funds) are underweight bonds and overweight equities, a tight bank funding market for companies and the determination of government and regulators to make bonds more attractive for both issuers and investors,” FIIG chief executive officer Mark Paton said.
“These are all long-term drivers that will support the growth of this market until corporate bonds occupy the same key role in company funding in Australia that they do in other developed countries.”
FIIG was recently sole lead manager of a bond issue for G8 Education which exceeded the minimum amount of $30 million by being filled at $70 million.
The issue had three institutional investors participating, had a term of six years and a coupon at 7.65 per cent per annum.
According to FIIG, this bond issue was a “landmark” in the emergence of a mid-sized corporate bond market in Australia and the number of institutional investors was a “positive development for this part of the market”.
“It is pleasing that a larger number of institutions are now participating in these investments, which is a further endorsement of the quality of the issuers and the structure of the Corporate Bond issuance,” Mr Paton said.
“This bond issue by G8 Education, an ASX Top 200-listed company, is a landmark for the development of the Australian corporate bond market because it proves these issues are not novelties and are part of a sustained pipeline that will play a big role in solving the funding problem for Australian mid-caps.
“FIIG is determined to create access to fixed income investments for investors and issuers in Australia.”
The bond issue by G8 Education is the third of its kind in Australia, following a successful $50 million bond issue arranged by FIIG Securities for Mackay Sugar in March and a $30 million issue for equipment financier Silver Chef in August last year.
