We’ve added two new CenturyLink and one Hertz Corporation dollar fixed rate bonds to our USD DirectBonds list, and one Bendigo & Adelaide Bank floating rate bond to our AUD DirectBonds list. The DirectBonds offer indicative yield to worsts up to 8.61 % and are available to wholesale investors in minimum face value parcels of USD10,000
Bendigo & Adelaide Bank (Bendigo)
Bendigo and Adelaide Bank Ltd (Bendigo) is a regional bank that specialises in retail banking, with a focus on rural communities. Bendigo is a top 60 ASX listed company with assets under management of more than $50bn and market capitalisation of around $5.7bn as at 13 December 2016.
Bendigo offers a range of banking and wealth management services across all states and territories in Australia, with a particularly strong retail deposit franchise and community focus. Its largest operations are in Victoria and South Australia. It also owns both Rural Bank and Delphi Bank, and operates the margin lending business, Leveraged Equities.
The AUD bond is floating rate and available to wholesale clients only, in minimum face value parcels of AUD10,000 and AUD10,000 denominations thereafter.
| Security | Rank | Next call date | Maturity date | Factsheet link |
| Bendigo & Adelaide Bank AUD December 2026 | Tier 2 – 10 year non call five | 9 December 2021 | 9 December 2026 | Factsheet
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CenturyLink Inc. (CenturyLink)
CenturyLink is an integrated communications company with operations in North America, Europe and Asia. The company provides communication services, including: voice, network access, private line, broadband, data, managed hosting (including cloud), wireless and video services. Further, it owns and operates an expansive physical network, comprised of a 250,000 route mile US fibre network and a 300,000 route mile international transport network.
In October 2016, CenturyLink announced its intention to acquire Level 3 Communications (Level 3). The transaction is valued at USD34bn and assumes USD10.2bn of acquisition debt, including an expected USD2bn undrawn revolving credit facility (RCF). The transaction is pending regulatory approval, and management expects a closing date in the third quarter of 2017. The combined business results in a large network of assets in North America, as well as an expansion of CenturyLink’s global footprint, reducing overall reliance on legacy revenues and the consumer portion of its customer base. Level 3’s lower exposure to legacy revenues also boosts cashflow generation for the combined entity, versus CenturyLink on a standalone basis.
Prior to giving consideration to the merger transaction, 50% of CenturyLink’s revenues are currently generated from legacy services, such as phone and fixed line, which have been suffering declines due to the changing trends in the way that communication services are being consumed.
Both USD bonds are fixed rate and available to wholesale clients only, in minimum face value parcels of USD10,000 and USD1,000 denominations thereafter.
| Securities | Rank | Next call date | Maturity date | Yield to worst* | Factsheet link |
| CenturyLink USD April 2025 | Senior unsecured | 1 January 2025 | 1 April 2025 | 5.82% | Factsheet
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| CenturyLink USD September 2039 | Senior unsecured | 'Make whole' scenario at 50bps over the relevant treasury yield until maturity | 15 September 2039 | 8.61% | Factsheet
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Pricing is indicative as at 13 December 2016 but subject to change.
Hertz Corporation (Hertz)
Hertz is a global provider of car rental and car lease services, and is the largest on airport car rental company in the US. Hertz brands include Hertz, Dollar, Thrifty, and Firefly, and are targeted at a broad range of potential customers on the value spectrum. Hertz operates over 10,000 locations internationally, including those operated through franchise agreements. Over three quarters of total revenues are generated in US operations, and US car rentals account for approximately 70% of total revenues as at FYE15^. International car rentals account for approximately 23% of total revenues, whilst other operations – including Hertz’s fleet management business Donlen – accounts for the remaining 7%. On airport car rental revenues account for around 70% of worldwide car rental revenues – as such, Hertz’s operating performance is strongly tied to trends affecting global airline passenger traffic.
The Hertz USD bond is fixed rate and available to wholesale clients only, in minimum face value parcels of USD10,000 and USD1,000 denominations thereafter.
| Security | Rank | Next call date | Maturity date | Yield to worst* | Factsheet link |
| Hertz Corporation USD October 2024 | Senior unsecured | 15 October 2019 | 15 October 2024 | 6.74% | Factsheet
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Pricing is indicative as at 13 December 2016 but subject to change.
Please contact your FIIG representative for further details on our recent DirectBonds. Note the factsheets are a summary only and should not be considered as credit research.
*Yield to worst is the lowest yield an investor can expect when investing in a callable bond.
^Revenue shares have been pro forma adjusted for the separation of HERC from Hertz, which occurred in mid 2016.