POWERED BY MOMENTUM MEDIA
Demand for bonds to rise
 |
| Stephen Halmarick
|
Government budget deficits and infrastructure funding requirements will see Commonwealth and state government bond issuance surge in coming years to overtake non-government bond issuance, according to research by Colonial First State's head of investment markets research, Stephen Halmarick.
The research shows that Commonwealth bonds will likely more than double from a current 20 per cent of the market to more than 40 per cent, while state government bonds are likely to remain around 30 per cent of the total.
At the same time, the pace of total net non-government bond issuance is expected to slow, falling from a current 50 per cent of the total Australian bond market to about 25 per cent.
"After being dominated for many years by rising non-government bond issuance in an environment of government debt reduction, the structure of Australia's bond market is set to change dramatically," Halmarick said.
However, the coming surge in the supply of Commonwealth and state government debt is unlikely to dampen potential demand for these bonds, he said.
"We would be surprised if investors, especially those offshore, including central banks, do not find Australian government bonds, in both Commonwealth and state form, an attractive addition to their Australian dollar portfolios."
He added that the dramatic change in the structure of Australia's bond market would nevertheless be an "important factor for both investors and borrowers in the Australian economy".
"It could bring with it implications for potential funding costs and returns in this sector of the market, as well as overall asset allocation."
AUTHOR
Mike Taylor
Recommended for you
Governor Michele Bullock took a more hawkish stance on Tuesday, raising concerns over Donald Trump’s escalating tariffs, which sent economists in different directions with their predictions.
Equity Trustees has announced the appointment of Jocelyn Furlan to the Superannuation Limited (ETSL) and HTFS Nominees Pty Ltd (HTFS) boards, which have oversight of one of the companies’ fastest growing trustee services.
Following growing criticism of the superannuation industry’s influence on capital markets and its increasing exposure to private assets, as well as regulators’ concerns about potential risks to financial stability, ASFA has released new research pushing back on these narratives.
A US-based infrastructure specialist has welcomed the $93 billion fund as a cornerstone investor.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
GAM LSA Private Shares AU I
37.08 3 y p.a(%)
2
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
32.63 3 y p.a(%)
3
Fidante Credit Suisse Global Private Equity
32.16 3 y p.a(%)
4
Global X GlobalX FANG+ ETF
28.28 3 y p.a(%)
5
Plato Global Alpha A
27.76 3 y p.a(%)
