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Corporate bond landscape opens up for retail investors

Investors will be able to access senior corporate Qantas and Caltex bonds on the ASX, as the Australian Corporate Bond Company (ACBC) expands its range of exchange-traded bond units (XTBs).

ACBC is set to release a second tranche of six XTBs. This takes its 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 a low minimum investment. XTBs also give investors access to an asset class on the ASX previously only available in opaque off-exchange wholesale markets.

The release of the 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 were between 3.05 per cent and 5.22 per cent as of 18 September 2015.

ACBC chief executive Richard Murphy told ifa 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".

XTBs' yields generally sit between the yields available on cash accounts and term deposits and the income available on debt-equity hybrids.