- QBE Insurance Group Limited 5.25% USD Perp
- Issuer Rating: A-(S&P positive), Baa1 (Moody’s, stable), A- (Fitch, positive)
- Issue Rating : Baa3 (Moody’s), BBB-(Fitch)
- Issue size : US$400M
- First call: 16 May 2025, and every 5 years thereafter
- Reset : 5Y UST + 3.047%
- APRA (Australian Prudential Regulation Authority which overseas banks and insurance in Australia) may decide to write off if non-viability trigger event occurs.
- YTC : 4.86%
- Net supercharge yield on funding US$65k and financing the rest at 2.5% : 9.6%
- Stock has been paying dividends in last 10 years
- Debt to asset of 8%
- Debt to total equity of 33%
I observed that Australian bond prices are very high, and 101.8 seems cheap to me as I expect their fair price to be about 104.
Look at the 1 year stock charts of ANZ (first chart) and QBE (second chart).
They look similar.
Lets now take a look at the price of ANZ 6.75% USD perp, with call date on Jun 2026, and with similar non-viability event or write offs. The price is ……………………. 114!
I do not think QBE 5.25% can go to 114, but 104 is probably within its means.
- I'm a remisier with Maybank Kim Eng, and as a bonds and REITs investor myself, I guide my clients to build resilient bonds and REITs portfolios. If you like to be guided, please contact me regarding how to become my client; It's free!
- WealthLions is my blog where I journal my trading ideas and share my opinions about the markets. To receive an email whenever I post them, please subscribe to my Blog Updates. If you like to be kept posted of my events, please subscribe to my mailing list. No spam, I promise.