Our Fixed Interest Weekly Trading Idea: Buy ORGHA On a risk / reward basis, ORGHA is another security worthy of consideration, for investors seeking a yield...

Bell Potter

Stockbroker

Our Fixed Interest Weekly Trading Idea: Buy ORGHA On a risk / reward basis, ORGHA is another security worthy of consideration, for investors seeking a yield of ~6.00%. The trading margin on ORGHA has increased from 2.51% at $101.45 on 24 Nov 2014 to 3.79% at $101.45. The yield uplift requires investor comfort around the incremental risks involved in investing in subordinated debt of Origin Energy, which is an ASX top 20 company. The APLNG project has been significantly de-risked with it being 88% complete at Dec 2014. This is expected to contribute earnings by mid 2015. While the fall in the oil price to below USD60bbl has reduced ORG's expected share of APLNG distributable cash flow from ~$1bn p.a. to ~$900m p.a. from FY17, ORG has stated APLNG is cash cost breakeven at an oil price of USD40-45bbl. ORG has also improved its funding profile. On 11 Dec 2014, ORG announced it had increased it $6.6bn syndicated loan facility by $750m, extended its debt maturities 16 months and reduced its interest cost by 0.30% p.a. In Sep 2014, ORG completed a EUR1bn equity credit subordinated debt issue. View the full report here: (VIEW LINK)


Bell Potter Securities is a leading Australian stockbroking, investment and financial advisory firm that provides a comprehensive offering of financial services to a diversified client base that includes individuals, institutions and corporations.

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