New wave of exchange traded bonds hits market

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A new tranche of exchange traded bonds has hit the ASX, with more to come.

The Australian Corporate Bond Company (ACBC) has announced the official release of a second tranche of six XTBs, taking the range to 23. The first tranche was launched in May this year, with a third and fourth tranche due in the comong weeks.

Today's tranche includes senior bond coverage of three Qantas bonds, as well as one each from APA Group, Caltex and Mirvac. The indicative yields range from 2.83% to 4.98%.

“XTBs are an easy way for investors to protect their investment portfolio by accessing fixed income diversification.  Exposure to the senior corporate bond market provides regular, predictable income as well as capital stability.  Corporate bonds and XTBs, typically sit in the defensive part of investor portfolios. They are generally negatively correlated to equities and hybrids”, Mr. Murphy said, “so, as a general rule, corporate bonds or XTBs do not decline in capital value when equity markets fall, whereas shares and hybrids generally do,” ACBC CEO and co-founder Richard Murphy said.

"While it’s still early days for XTBs, we’ve been very encouraged by the positive feedback we’ve been getting from advisers and investors to date. Going forward we remain focused on continuing to educate investors on the benefits of gaining exposure to corporate bonds and rolling out new tranches of XTBs.”