Investors will have greater access to corporate bonds on the ASX, with the Australian Corporate Bond Company (ACBC) expanding its range of exchange-traded bond units (XTBs) to include Qantas and Caltex among other big-name companies.
ACBC is set to release a second tranche of six exchange-traded bond units (XTBs), taking the range to 23 XTBs with a third and fourth tranche to be released shortly.
With the first tranche launched in May this year, XTBs offer investors simple ASX-traded investment securities.
Each XTB provides access to the performance of a different underlying senior corporate bond, with low minimum investment. XTBs give investors access to an asset class on ASX previously only available in opaque off-exchange wholesale markets.
The release of XTBs includes senior bond coverage for three Qantas bonds, and one each from APA Group, Caltex, and Mirvac.
The indicative yields of these new XTBs was between 3.05 per cent and 5.22 per cent on 18 September 2015.
ACBC chief executive Richard Murphy told InvestorDaily that XTBs could be a better option than other fixed income solutions.
“A lot of IFAs put their clients' money in short-term cash accounts, but often they only get 1.8 per cent,” he said.
“There was an empty niche on the exchange for this type of product.”
The yields on XTBs generally sit between the yields available on cash accounts and term deposits and the income available on debt-equity hybrids.