The Overview of the Australian Bond Market
The overview of the Australian bond market
Nowadays, bonds are playing an increasing important role in investors’ portfolios, and which is defined as is a fixed interest type of investment option that would repay the principal and interest on a certain date in the future. By diversification, bonds also do a great contribution in reducing the risk of shares and property securities portfolio. The importance of the bond market has been realized by investors and bonds have been an important investment options.
Owing to a store of value and capital stability; compared to equity, less price volatility, bonds are attracting more and more investors; the price of bond has low correlation with the price of equity; and bonds can provide stable income and cash flow.
The bonds, in Australian market, could be mainly identified as government bonds and non-government bonds, various definitions and information which relate to different kinds of bonds are illustrated in the following section..
Commonwealth Government Bonds The commonwealth government bonds are bonds issued through a tender process by RBA and managed by Australian Office of Financial Management (AOFM). The commonwealth bonds are the most liquid bond in Australian debt market. They are AAA rated and interest payments on Commonwealth Government Securities are eligible for exemption from non-resident interest withholding tax. There are two kinds of commonwealth government bonds: * Treasury Fixed Coupon Bonds are the main type of bond issued, accounting for about 80 per cent of Commonwealth Government Securities outstanding. They provide a fixed rate coupon. For example, a 5% coupon would pay the bond holder $5 per annum per $100 face value. The principal of the bond can be got at maturity, or you can sell the bond to the RBA at the published buy rate. * Treasury Indexed bonds are bonds offering investors a real rate of return. Just like Treasury Inflation Protected Securities (TIPS) in the US, the
Nowadays, bonds are playing an increasing important role in investors’ portfolios, and which is defined as is a fixed interest type of investment option that would repay the principal and interest on a certain date in the future. By diversification, bonds also do a great contribution in reducing the risk of shares and property securities portfolio. The importance of the bond market has been realized by investors and bonds have been an important investment options.
Owing to a store of value and capital stability; compared to equity, less price volatility, bonds are attracting more and more investors; the price of bond has low correlation with the price of equity; and bonds can provide stable income and cash flow.
The bonds, in Australian market, could be mainly identified as government bonds and non-government bonds, various definitions and information which relate to different kinds of bonds are illustrated in the following section..
Commonwealth Government Bonds The commonwealth government bonds are bonds issued through a tender process by RBA and managed by Australian Office of Financial Management (AOFM). The commonwealth bonds are the most liquid bond in Australian debt market. They are AAA rated and interest payments on Commonwealth Government Securities are eligible for exemption from non-resident interest withholding tax. There are two kinds of commonwealth government bonds: * Treasury Fixed Coupon Bonds are the main type of bond issued, accounting for about 80 per cent of Commonwealth Government Securities outstanding. They provide a fixed rate coupon. For example, a 5% coupon would pay the bond holder $5 per annum per $100 face value. The principal of the bond can be got at maturity, or you can sell the bond to the RBA at the published buy rate. * Treasury Indexed bonds are bonds offering investors a real rate of return. Just like Treasury Inflation Protected Securities (TIPS) in the US, the