Weekly trading idea: Switch Tabcorb Subordinated Notes (TAHHB) into Tatts Bonds (TTSHA)
Weekly trading idea: Switch Tabcorb Subordinated Notes (TAHHB) into Tatts Bonds (TTSHA). TAHHB at $105.40 (Mar 2017 call) appears as one of the most expensive ASX listed debt and convertible securities. The premium to face value reduces the 4.00% issue margin down to a trading margin of 1.85%. By contrast, TTSHA at $105.99 (July 2019 maturity) is on a trading margin 0.15% higher at 2.00% (issue margin 3.10%). TTSHA also has the advantage of an upcoming interest payment, ex interest $1.444 on 25 June. TAHHB has just gone ex interest $1.66 on 11 June. In terms of security structure, TTSHA is a rare example of an ASX listed vanilla senior debt security. A premium is required on TAHHB given it is a lower ranking subordinated debt security with equity credit features.
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