Our fixed interest weekly trading idea: Buy Origin Energy Notes (ORGHA) on weakness

Bell Potter


Our fixed interest weekly trading idea: Buy Origin Energy Notes (ORGHA) on weakness. After closing at $104.10 on 24 November 2014 (2.51% trading margin), ORGHA have seen considerable weakness prompted by the fall in the oil price and the announcement that Santos would defer its Euro hybrid issue until market conditions improve. Trade on 5 December 2014 saw ORGHA hit a low of $100.28, representing a trading margin of 4.62% with the security being ex interest $1.66 on 10 December. This appears an over-reaction on account of: Origin has significantly less sensitivity to a lower oil price than Santos, with its core business as an energy retailer to 4.3m customers; APLNG has substantially been de-risked with production still on target for mid-2015. As at 30 September 2014, the project was 84% complete; and Origin successful raised EUR1.0bn of subordinated debt with 50% equity credit on 9 September 2014. This security had a fixed 4.00% p.a. coupon for the first 5 years, which equates to 7.91% p.a. after hedging into Australian dollars.

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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