“The whole core offering of FIIG is about corporate bonds and term deposits, and SMSFs are a very big part of our focus; 82 per cent of our client base are SMSF investors,” FIIG Securities chief executive Mark Paton told SMSF Adviser.
“The Cash Converters issue is just one of the number of bonds that we’ve done,” he added. “There are broader bonds available in the market that we’re facilitating and taking out of institutional pools and putting them into the hands of SMSF owners.”
The five-year unsecured note issue will raise $50 million to $60 million, with a coupon payment of 7.95 per cent, and will have a minimum initial investment of $50,000.
FIIG said that with bond issues increasingly being seen as a low-risk way to diversify debt, the level of mid-cap interest was “turning from a trickle into a flood”.
“The bond market for mid-cap corporate has gone from something that we all agree should happen sometime to something that is actually happening before our eyes,” Mr Paton said.
“This market is serving the dual needs of investors and issuers by offering funding to mid-sized corporates with a tenor that is not readily available in the bank market, while giving investors access to fixed income investments with well-known companies that pay more attractive yields than a bank deposit.”
The Cash Converters announcement follows recent note issues by G8 Education Limited, Mackay Sugar Limited and Silver Chef Limited.
Mr Paton said a number of market trends are assisting those interested in the Australian corporate bond market.
“There are a range of trends converging, including a recognition that superannuation funds are underweight in bonds, a tight bank funding market for companies and the desire of regulators to make bonds more attractive for issuers and investors,” he said.
“These long-term trends will support the growth of this market until corporate bonds have the same place in the Australian investment landscape that they do in other developed countries.”
