Corporate Hybrids. Figure 1. Summary of Recommendations

Transcription

1 2017 Handbook Credit Research Corporate Hybrids Jack Pobjoy Credit Analyst (+61) jack.pobjoy@bondadviser.com.au Nicholas Yaxley Head of Research (+61) nicholas.yaxley@bondadviser.com.au The BondAdviser Corporate Hybrid Handbook 2017 is designed to be a useful reference for ASXlisted corporate hybrid securities and the credit profiles of their underlying issuers. We believe there are a number of attractive investment opportunities across different corporate industries and the recommendation table below reflects our views on these particular securities. Corporate hybrids are overshadowed in a market dominated by banks and other financial institutions. As a result, many investors fail to reap the diversification benefits that non-financial issuers offer in a balanced portfolio. While bank and other financial hybrids are often driven by macro-economic, regulatory and/or political themes and trends, corporate hybrids warrant a more case-by-case approach which promotes diversification. For this reason, corporate hybrids should not be overlooked. Given the lower-for-longer interest rate environment, the search for yield is becoming an increasingly difficult task. While hybrids continue to be an attractive option to boost income, they are not without inherent risks. Figure 1. Summary of Recommendations Buy Hold Sell APA Group Subordinated Notes (AQHHA) Crown Subordinated Notes I (CWNHA) Crown Subordinated Notes II (CWNHB) AGL Subordinated Notes (AGLHA) Goodman Preferred Step- Up Securities (GMPPA) Origin Energy (ORGHA) Seven TELYS4 (SVWPA) Ramsay CARES (RHCPA) Woolworth Subordinated Notes (WOWHC) Caltex Subordinated Notes (CTXHA) Tabcorp Subordinated Notes (TAHHB) Multiplex SITES (MXUPA) Nufarm Step-Up Securities (NFNG) Source: BondAdviser Tatts Bonds (TTSHA), Peet Bonds (PPCHA) and Qube Subordinated Notes (QUBHA) are excluded from this report as they are not considered hybrid securities. 1 Bond Adviser Pty Ltd

2 Table of Contents 3. Introduction: Why Corporate Hybrids 4. Hybrids: Debt or Equity? 5. Corporate Hybrid Characteristics 6. Corporate Hybrids Structure Summaries 7. Valuation 8. Market Size 9. Historical Risk and Return 12. Market Performance 16. Outlook: Top Trades 19. Company Profiles AGL Energy APA Group Caltex Australia Crown Resorts Goodman Plus Trust (Goodman Group) Multiplex SITES Trust Nufarm Origin Energy Ramsay Health Care Seven Group Tabcorp Holdings Woolworths 32. Appendix 1: Accounting Treatment of Hybrids 33. Appendix 2: Trust Structures 34. Appendix 3: Non-Called Hybrids 2 Bond Adviser Pty Ltd

3 Introduction: Why Corporate Hybrids? Hybrid securities are instruments that feature characteristics of both debt and equity and are generally complex and highly structured instruments. A hybrid is the broad term used to describe an instrument that typically ranks behind senior debt but ahead of equity and in some cases can be converted into ordinary equity. However, they can incorporate numerous features that comprise either debt-like and equity-like traits. Why do companies issue hybrids? For some companies, it may be easier to raise debt instead of equity, especially for private companies that do not have access to capital markets. For others, it could be a case of cheap funding or tax benefits. Hybrids also allow companies to avoid common equity dilution which is a positive for earnings per share. On the other hand, companies may choose to issue hybrids over senior debt due to restrictive financial covenants that limit the amount of senior indebtedness the company can incur. Overall, the reasons behind hybrid issuance is diverse but will ultimately tie into the company s overarching capital management strategy. Over the past 5 years, hybrid issuance has been a by-product of credit rating methodology known as equity-credit. Under this criteria, hybrid securities are classified (partially or wholly) as equity instead of debt from a credit rating perspective. This in turn maintains the underlying issuer s credit metrics when assessed by the credit rating agencies. Equity credit typically ceases once a hybrid security reaches its call date. As a result, this gives the issuing company an incentive to call the security at this date unless the cost of servicing the hybrid remains relatively cheap to other funding sources (which is unlikely given the explanation below). By utilising the equity credit treatment companies incur higher interest costs (i.e. 2-3%) relative to normal debt instruments of bank funding. This is due to the capital structure and priority of payments, which differentiates traditional fixed income (i.e. bonds) from hybrid securities. Figure 2. General Corporate Capital Structure Corporate Capital Structure Low Risk Senior Secured Secondary Lien Secured Senior Unsecured Subordinated Debt Preference Shares Equity Bank Loans Bonds Hybrids Shareholders Source: BondAdviser High Risk Hybrids rank below senior debt and are therefore riskier investments. Due to this increased risk, hybrids will generally pay a higher return (as described above in the form in of a yield premium). It is therefore crucial that investor s understand the underlying issuer s capital structure to help justify the risk and return inherent in a potential hybrid investment. Additionally, as these securities are classified as a combination of equity and debt, they are generally more volatile than traditional debt instruments and behave in a manner similar to ordinary equity during periods of financial distress. 3 Bond Adviser Pty Ltd

4 Hybrids: Debt or Equity? Hybrids can be classified as either debt or equity depending on varying accounting treatment and methodology (see appendix 1). However, the truth is hybrids exhibit both equity and debt characteristics and this is the foundation behind the equity-credit given to companies by credit rating agencies. In the following diagrams, we dissect a general hybrid s structure to illustrate the overlay of debt and equity asset classes. Figure 3. Comparison of characteristics between hybrid instruments with debt and equity Hybrid Debt Equity Non-Deferrable Interest Optional Interest (Dividends) Cumulative Interest Payments Non-Cumulative Dividends Fixed Maturity Date No Maturity Date - Perpetual No Conversion Mandatory/Optional Conversion Unsubordinated Deeply Subordinated Source: BondAdviser Figure 4. Hybrid Security Spectrum Senior Debt Subordinated Debt with interest deferral Perpetual noncumulative debt Ordinary Shares Subordinated Debt Pure Debt Subordinated Debt with loss absorption Convertible preference shares and capital notes Pure Equity Source: Australian Securities and Investment Commission (ASIC) 4 Bond Adviser Pty Ltd

5 Corporate Hybrid Characteristics As previously mentioned, corporate hybrids warrant a case-by-case analysis. While all corporate hybrids are subordinated to senior debt and have some form of call date, there are unique securityspecific characteristics that must be considered. Deferral Risk Many hybrids exhibit a mandatory or optional coupon deferral condition. This effectively means that the issuer may either be forced or choose to defer payments to hybrid investors. The interpretation of what can actually trigger a distribution deferral can include events such as a credit rating downgrade or breach of one or more financial covenants specified in the terms of the hybrid documentation. An important detail is whether the deferred coupons are cumulative and/or compounding or not. If the coupons are cumulative, hybrid holders may recoup deferred payments once the deferral event ceases. As a result, all missed coupon payments will be paid at the next payment date. If the coupons are also compounding, interest earned on deferred distributions will also be reimbursed to the investor. If the hybrid is non-cumulative, then deferred (or missed) distributions will never be repaid. If deferral occurs, the issuer may also be subject to a dividend pusher and/or stopper. Dividends stoppers ensure that all securities subordinated or on par with the hybrid (in regards to their position on the capital structure) are not paid distributions until payments are resumed on the hybrid (or in some cases until after a certain time period of resumed payments). Dividend pushers, on the other hand, ensure that before a dividend payment is made, coupons on the hybrid are being paid again. Step-Ups Hybrids may also be subject to various coupon step-up conditions. A feature of some hybrid securities is a pre-specified coupon step-up if the issuer fails to redeem the hybrid security at its call date. A coupon step-up could also occur if the underlying issuer experiences a credit rating downgrade or breaches a financial covenant. As the step-up will increase the funding cost, the issuer may have an economic incentive to call the hybrid as it may be replaced by a similar security (or even another hybrid) with more favourable terms (to the issuer). Callability The callability of a hybrid depends on its structure and term. The hybrid can either have a prespecified call date, multiple call dates, callable over a pre-defined period or callable at any time. It is also worth noting that in some cases the call date is referred to as the reset date or the remarketing date. At the call date, the hybrid may either be redeemed and/or converted into ordinary equity depending on the terms of the relevant documentation. Convertibility Some hybrids give the issuer the option to convert their hybrid securities into ordinary shares at a pre-defined ratio. In some other cases, the option is given to hybrid holders and they can decide what is the most profitable option (redemption, convertibility or some other special scheme). Long Term While call dates generally range anywhere from 5 to 20 years, a hybrid s term to maturity can span over decades. This is a characteristic similar to the perpetual nature of common equity. Some hybrids are simply classified as perpetual and remain outstanding until called by the issuer. The following page gives a summary of ASX-Listed corporate hybrid structures. 5 Bond Adviser Pty Ltd

6 Corporate Hybrid Structure Summaries Figure 5. Hybrid Structure Summaries Ticker AGLHA AQHHA CTXHA CWNHA CWNHB GMPPA MXUPA NFNG ORGHA RHCPA SVWPA TAHHB WOWHC Issuing Entity AGL Energy Ltd APT Pipelines Ltd Caltex Aus Ltd Crown Resorts Ltd Crown Resorts Ltd Goodman Plus Trust Multiplex SITES Trust Nufarm Finance (NZ) Ltd Origin Energy Ltd Ramsay Health Care Ltd Seven Grp Holding Ltd Tabcorp Holdings Ltd Woolworths Ltd Capital Structure Position Subordinated Subordinated Subordinated Subordinated Subordinated Subordinated Subordinated Subordinated Subordinated Subordinated Subordinated Subordinated Subordinated Size ($m) Equity Credit 0% 50% 50% 50% 50% 50% 0% 50% 50% 0% 0% 50% 50% Date Issued 4/04/ /09/2012 5/09/ /09/ /04/ /12/ /01/ /11/ /12/ /05/ /04/ /03/ /11/2011 Maturity 8/06/ /09/ /09/ /09/ /04/2075 Perpetual Perpetual Perpetual 22/12/2071 Perpetual Perpetual 22/03/ /11/2036 First Call Date 8/06/ /03/ /09/ /09/ /07/ /09/2017 1/04/ /11/ /12/ /08/ /05/ /03/ /11/2016 At Option of Issuer Issuer Issuer Issuer Issuer Issuer Issuer Issuer Issuer Issuer Issuer Issuer Issuer Redeem Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Exchange No No No No No Yes Yes Yes No Yes Yes No No Transfer No No No No No No No No No No No No No Second Call Date No No No No No 31/12/ No No No No No No No Fixed Coupon (p.a.) Floating Margin (p.a.) 3.80% 4.50% 4.50% 5.00% 4.00% 3.90% 1.90% 1.90% 4.00% 2.85% 2.50% 4.00% 3.25% Coupon Frequency Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Semi-Annual Quarterly Semi-Annual Semi-Annual Quarterly Quarterly 1st Step-Up Date 8/06/ /03/ /09/ /09/ /07/ /09/2022 1/04/ /11/ /12/ /10/ /12/ /03/ /11/2016 Step-Up Amount (p.a.) 0.25% 1.00% 0.25% 1.00% 1.00% 0.25% 2.00% 2.00% 1.00% 2.00% 2.25% 0.25% 1.00% 2nd Step-Up Date N/A N/A N/A N/A N/A 31/12/2038 N/A N/A N/A N/A N/A N/A N/A Step-Up Amount (p.a.) N/A N/A N/A N/A N/A 0.75% N/A N/A N/A N/A N/A N/A N/A Interest Deferral Optional & Mandatory Optional Optional Optional & Mandatory Optional & Mandatory Optional Optional Optional Optional & Mandatory Optional Optional Optional & Mandatory Optional Non-Cumulative Deferral No No No No No Yes Yes Yes No Yes Yes No No Compounding Deferral Yes Yes Yes Yes Yes N/A N/A N/A Yes N/A N/A Yes Yes Dividend Stopper No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes 1 At option of holder to either exchange or redeem. Source: Company Reports, BondAdviser 6 Bond Adviser Pty Ltd

7 Yield-To-Expected-Call Corporate Hybrids 2017 Handbook Valuation Our valuation assumptions for hybrids can vary but are generally based on the security being redeemed (in full) at the first call date with all interest payments being made in full and in a timely manner. Timing of this call option is crucial to the performance of the security. The pricing of a hybrid security can differ materially depending on whether the instrument is priced to the optional call date, other call dates or its legal final maturity date For perpetual securities that were not called at their initial call date and remain outstanding we assume a 15-year swap yield to price accordingly. Due to the greater degree of uncertainty, perpetual hybrids tend to trade at a yield premium to hybrids that are yet to reach their first call date. These hybrids include SVWPA, MXUPA, RHCPA and NFNG (see Appendix 3). Figure 6. Corporate Hybrid Yield to Expected Call 12.00% 10.00% 10.29% 9.25% 8.73% 8.53% 8.00% 7.46% 7.27% 7.01% 6.21% 6.00% 4.99% 4.65% 4.47% 4.08% 3.93% 4.00% 2.00% 0.00% Source: BondAdviser as at 30 th of September 2016 Figure 7. Corporate Hybrid Yield to Expected Call Vs Term 12.00% 11.00% 10.00% SVWPA 9.00% 8.00% ORGHA CWNHB MXUPA 7.00% CWNHA NFNG RHCPA 6.00% GMPPA 5.00% 4.00% 3.00% WOWHC TAHHB CTXHA AQHHA AGLHA 2.00% Perpetual 16 Term (Years) Source: BondAdviser as at 30 th of September Bond Adviser Pty Ltd

8 Market Size The ASX-listed debt & hybrid market is dominated by financial issuers, particularly the major banks who have issued capital instruments to meet regulatory requirements. Corporate issuance is typically smaller than financial issuance as illustrated in Figure 8. Figure 9 shows the effect the global financial crisis had on issuance for Australian corporates in 2010 and Activity picked up in 2012 as a number of companies utilised the credit rating equity methodology to support their balance sheets. In 2013, this methodology was adjusted by Standard and Poor s and subsequently many hybrids qualified for immediate treatment (50%) rather than high treatment (100%). As a result, many corporates have become reluctant to issue new hybrids despite strong demand from retail investors. Figure 8. ASX-Listed Hybrid Market ($billions) $60bn $54.1 $50bn $40bn $36.5 $42.9 $47.1 $47.9 $30bn $20bn $26.1 $23.2 $26.5 $10bn $0bn Financial Corporate Source: ASX, BondAdviser Figure 9. The Listed Corporate Hybrid Market ($billions) $12bn $10bn $10.0 $8bn $6.5 $6.7 $7.8 $7.8 $7.1 $6.9 $6.9 $6bn $4bn $2bn $0bn Source: ASX, BondAdviser 8 Bond Adviser Pty Ltd

9 Frequency Corporate Hybrids 2017 Handbook Historical Risk and Return When markets are stable, hybrids act like debt but when equity markets become volatile hybrids begin to behave more and more like equity. This is one of the key differences between hybrids and more traditional debt instruments such as bonds. Figure 10 depicts the volatility between asset classes. Figure 10. Equity Vs Bond Vs Hybrid Index Performance Post GFC (Rebased) S&P/ASX200 Accumalation Index AusBond Composite Index Evans & Partners Hybrid Index Source: Bloomberg, Evans & Partners as at 30 th of September 2016 On a monthly return basis, hybrids have performed, 0.15% better than bonds (on average) since This has been accompanied by greater volatility (see figure 11) but given these returns have been (to a large extent) normally distributed we can see hybrids have remained a reliable source of income. Figure 11. Normal Distribution of Hybrid and Bond Monthly Returns (Post GFC) % -4.00% -2.00% 0.00% 2.00% 4.00% 6.00% Montly Return Bond Normal Curve Hybrid Normal Curve Source: BondAdviser, Bloomberg, Evans & Partners *Note: All hybrids included. 9 Bond Adviser Pty Ltd

10 Frequency Frequency Frequency Corporate Hybrids 2017 Handbook As the figures below illustrate, while bond and hybrid returns have followed normally distributed characteristics, the same cannot be said for equity returns (which have delivered an average 0.83% monthly return). Instead, since the GFC, equity returns have exhibited a wider distribution with the majority of returns occurring in the tails. Given the 0.15% additional average monthly return when moving from bonds to hybrids then the 0.18% additional average monthly return moving from hybrids to ordinary equity, we can see the risk of moving between asset classes follows an exponential relationship (i.e. risk increases faster than return). However, this data may not be representative of a longer time horizon. Figure 12. Bond Monthly Returns Frequency Distribution Versus Normal Distribution (Post GFC) % -4.00% -2.00% 0.00% 2.00% 4.00% 6.00% Source: Bloomberg, BondAdviser Montly Returns Figure 13. Hybrid Monthly Returns Frequency Distribution Versus Normal Distribution (Post GFC) % -6.00% -4.00% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00% Source: Evans & Partners, BondAdviser *Note: All Hybrids Included. Montly Returns Figure 14. Equity Monthly Returns Frequency Distribution Versus Normal Distribution (Post GFC) Bond Adviser Pty Ltd % -8.00% -6.00% -4.00% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% Montly Returns Source: Bloomberg, BondAdviser

11 The following table displays individual security returns over the last 10 years. The results are consistent with our previous notions and demonstrates the volatility experienced during the GFC before returning to more stable levels in recent years. Figure 15. Individual Corporate Hybrid Returns Ticker AGLHA AQHHA CTXHA CWNHA CWNHB GMPPA MXUPA NFNG ORGHA RHCPA SVWPA TAHHB WOWHC 1 Month 1.22% -0.26% 0.40% 1.53% -1.11% -1.00% -0.25% 1.15% 0.00% 2.01% -0.11% -0.14% -0.16% 3 Month 2.71% 2.44% 1.23% 5.73% 5.82% 0.22% 2.01% 5.39% 2.22% 1.94% 26.20% 1.34% 1.32% 6 Month 5.08% 3.77% 3.34% 20.36% 19.49% 4.18% 3.13% 9.96% 3.57% 3.40% 22.82% 2.42% 1.58% 1 Year 7.64% 4.65% 5.29% 7.09% 2.87% 5.84% -0.31% 13.82% 12.70% 9.05% 18.55% 4.67% 4.71% 2 Year 12.63% 11.86% 9.95% 8.24% % -2.56% 11.65% 10.70% 9.43% -6.96% 8.40% 7.42% 3 Year 17.57% 18.67% 17.32% 16.41% % 9.04% 22.97% 18.87% 15.98% -1.70% 19.30% 12.85% 4 Year 30.25% % 32.03% 52.46% 28.31% 27.86% 9.86% 31.16% 20.03% 5 Year % 42.65% 85.63% % 13.82% Year % % 75.40% % 16.76% Year % % 32.08% - - Since Inception (p.a.) 7.18% 7.62% 7.61% 7.41% -2.18% 9.49% 7.40% 7.29% 6.90% 6.21% 3.39% 7.02% 6.03% FY17 YTD 2.71% 2.44% 1.23% 5.73% 5.82% 0.22% 2.01% 5.39% 2.22% 1.94% 26.20% 1.34% 1.32% FY % 4.45% 5.18% 0.11% -6.40% 6.42% -7.37% 6.48% 5.34% 5.41% % 5.97% 3.92% FY % 3.36% 3.67% 1.46% % 3.55% 7.73% 2.57% 1.55% -7.74% 2.07% 2.64% FY % 11.07% 12.11% 12.53% % 15.80% 20.48% 10.49% 5.98% 10.55% 13.37% 5.89% FY % % 18.74% 13.25% 7.72% 10.00% 12.94% 9.49% 7.76% FY % -1.64% 9.75% % -6.26% - - FY % 18.22% 8.15% % 25.55% - - FY % % 10.72% % -8.63% - - FY % % -5.68% % 6.78% - - FY % -8.19% % -6.72% - - FY % % 5.34% - - FY % % 8.45% Financial Year to Date Source: BondAdviser as at 30 th of September Bond Adviser Pty Ltd

12 Jan-2013 Mar-2013 May-2013 Jul-2013 Sep-2013 Nov-2013 Jan-2014 Mar-2014 May-2014 Jul-2014 Sep-2014 Nov-2014 Jan-2015 Mar-2015 May-2015 Jul-2015 Sep-2015 Nov-2015 Jan-2016 Mar-2016 May-2016 Jul-2016 Sep-2016 Corporate Hybrids 2017 Handbook Market Performance While corporate hybrid performance has remained relatively stable over recent years, this has not always been the case with a number of issuer credit profiles deteriorating, particularity during the GFC. Two of Australia's high profile corporate defaults had issued corporate hybrid securities (ABC Learning and Babcock & Brown). However, the most recent hybrid default was that of forestry group, Gunns Limited. Although a minority, these examples illustrate the importance of due diligence and credit research when investing in corporate hybrid securities. As many hybrid securities include the option to defer distributions, issuers can decide to cease payments to solidify their financial positions in periods of distress. While this does not constitute default, it typically triggers a substantial sell-off in the hybrid security, especially if payments are deferred for a prolonged time. Prime examples include PaperlinX Step-Up Preference Securities (ASX: PXUPA) and Elders Hybrid (ASX: ELDPA) shown in Figure 16. These examples demonstrate extreme situations and the majority of corporate hybrids have performed in a more orderly fashion. Overall, investors should be aware there is greater volatility in corporate hybrids in comparison to more traditional fixed income securities such as bonds (Figure 17). Figure 16. GNSPA, PXUPA and ELDPA Price History $ $ $80.00 $60.00 $40.00 Defaulted $20.00 $ ELDPA PXUPA GNSPA Source: Bloomberg, BondAdviser Figure 17. Average Trading Margin of Issuers with both Australian Bonds and Hybrids Outstanding 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% Average Hybrid Trading Margin Average Bond Trading Margin 12 Bond Adviser Pty Ltd Source: BondAdviser, *Note: AGLHA, AQHHA, CTXHA, CWNHA, CWNHB and WOWHC included.

13 Over the past financial year, the average corporate hybrid trading margin has traded in a range of %. However, during January 2016 the trading margin broke the upper bound of this range and continued to widen through February before compressing back below 6.00% in March. As a result, there were a number of attractive opportunities in the corporate hybrid market that were consistent with our recommendations. Figure 18. Corporate Hybrid Weighted Average Trading Margin 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% Source: BondAdviser There were multiple events that caused the January breakout including the following: Corporate Activity at Crown Resorts In late 2015, a major shareholder of Crown (i.e. James Packer), signalled their intention to potentially privatise the company. This speculation, along with funding issues, was the major driver of volatility for both of Crown s Subordinated Notes (CWNHA & CWNHB). Figure 19. Crown Hybrids 2016 Trading Margin Performance 20.00% 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% Privatisation speculation and funding issues Reduction in shareholding of poor performing Melco joint venture Proposed Crown demerger relieves funding pressure Source: BondAdviser CWNHA CWNHB 13 Bond Adviser Pty Ltd

14 Debt Levels at Origin Energy over the course of the last 12 months, there was growing concerns surrounding the capacity of Origin to maintain its debt levels and overall liquidity. However, through a number of capital management initiatives including an equity raising and asset divestment program (both supported by the group s Liquefied Natural Gas (LNG) project becoming operational in March 2016) this bleak outlook improved. As a result, Origin has reaffirmed its intention to redeem its subordinated notes (ORGHA) at their call date in December Figure 20. Origin Hybrid (ORGHA) 2016 Trading Margin Performance 20.00% 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% $2.5 billion equity raising to maintain investment grade credit rating Speculation surrounding Origin's ability to redeem ORGHA by first call date Origin sells first asset of their $800 million divestment program Origin confirms to redeem ORGHA by first call date in December 2016 Source: BondAdviser Dividend Concerns at Seven Group Holdings Poor trading conditions and rising debt levels left SVWPA holders questioning Seven s ability to continue paying hybrid distributions. Seven announced in February 2016 that it is their intention to maximise shareholder value and maintain dividend payments. Due to the dividend stopper, this meant hybrid distributions would continue. Figure 21. Seven Group Hybrid (SWVPA) 2016 Trading Margin Performance 13.00% Concerns grow regarding Seven's ability to maintain dividends on SVWPA 12.00% Seven reaffirms ongoing dividend payments and focus on maximising free cashflow 11.00% 10.00% Seven posts poor 2015 full year results reflecting the end of Australia's mining boom 9.00% 8.00% 7.00% Source: BondAdviser 14 Bond Adviser Pty Ltd

15 2016 Financial Year (FY16) Snapshot Figure 22. FY16 Best and Worst Performers (Total Return) 10.00% 5.00% 0.00% -5.00% 6.48% 6.42% 5.97% 5.41% 5.34% 5.18% 4.45% 3.92% 3.52% 0.11% % -6.40% -7.37% % % % % Source: BondAdviser Figure 23. FY16 Performance Summary Price Trading Margin Min Max Average Std Dv Min Max Average Std Dv AGLHA $ $ $ % 3.87% 3.10% 0.320% AQHHA $ $ $ % 4.46% 3.13% 0.576% CTXHA $ $ $ % 4.29% 2.72% 0.482% CWNHA $75.40 $ $ % 18.08% 8.00% 3.447% CWNHB $65.50 $99.00 $ % 14.14% 7.90% 2.607% GMPPA $97.85 $ $ % 5.57% 4.28% 0.662% MXUPA $66.50 $84.38 $ % 7.66% 6.29% 0.497% NFNG $79.00 $86.01 $ % 5.89% 5.54% 0.127% ORGHA $90.01 $ $ % 17.97% 6.66% 2.575% RHCPA $ $ $ % 4.92% 4.72% 0.091% SVWPA $50.00 $79.70 $ % 12.81% 9.47% 1.143% TAHHB $99.21 $ $ % 4.72% 2.91% 0.648% WOWHC $ $ $ % 4.03% 2.34% 0.505% Source: BondAdviser Figure 24. FY16 Trading Turnover ($millions) $350 $300 $250 $200 $150 $100 $50 $0 15 Bond Adviser Pty Ltd Source: Bloomberg

16 Outlook: Top Trades Corporate hybrids have continued to perform well in the 2017 financial year with yields tightening by 0.36% on average. SVWPA has been strongest performer to date followed by CWNHA and CWNHB. The performance of SVWPA can be attributable to the on-market purchase of up to 10% of outstanding securities announced by Seven Group management in early August On the other hand, Crown s credit profile has improved significantly since early 2016 and this is reflective in the performance of both hybrids. Overall, corporate hybrid performance has been supported by the search for yield in a persistently low interest rate environment. We expect this to continue and there a number of compelling trade opportunities in the sector. We present our top buy recommendations below. Figure 25. FY17 Year-to-date Change in Yield-To-Call 2.00% 1.50% 1.00% 0.50% 0.00% -0.50% -1.00% -1.50% -2.00% -2.50% -3.00% -2.43% -1.68% -0.02% -0.30% -0.17% -0.87% -0.64% -0.63% -0.59% 0.03% 0.58% 0.60% 1.45% Source: BondAdviser as at 30 th of September APA Subordinated Notes (ASX: AQHHA) In recent years, the APA Group has made a string of acquisitions and investments in pursuit of earnings growth. The most significant acquisition was the Wallumbilla Gladstone Pipeline and was strategically targeted for the group to take advantage of increased demand from Queensland s Liquefied Natural Gas (LNG) Projects. In response to this unprecedented change in demand/supply levels in the Eastern Australian gas market, regulating entities have undertaken a series of reviews into industry dynamics. While it is too early to assess the implications for APA Group, a key recommendation made by the Australian Competition Consumer Commission (ACCC) to Council of Australian Governments (COAG) Energy Council was to revisit the regulatory coverage of pipelines as the report found pricing was largely unconstrained by either threat of regulation or effective competition. APA remains one of the most leveraged names under our coverage but regulatory pressure would significantly restrict APA s risk appetite, especially for acquisitions. Large-scale corporate activity is likely to be deterred by the ACCC and measured organic growth will be employed as an alternative. As the nature of this strategy is small-scale relative to history (Wallumbilla), we expect the group s funding requirements will be considerably less relative to previous years. Over the long term, APA s market power and earnings growth is likely to diminish as the regulatory scope for gas transmission increases but the end result should ultimately lead to less leverage, more risk controls and increased cashflow transparency which is a positive for credit investors. As a result, we expect AQHHA to continue to perform well. 16 Bond Adviser Pty Ltd

17 Crown Subordinated Notes I & II (ASX: CWNHA, CWNHB) Crown Resorts has been in the media spotlight for most of the year. The group has been subject to privatisation speculation, funding concerns and poor investment performance which has resulted in sharp price volatility for both of its subordinated note issues (CWNHA and CWNHB). However, the primary story surrounding Crown remains the proposed demerger (Figure 21) and potential public offering of a 49% interest in a property trust. Figure 26. Proposed Demerger of Crown Resorts Crown Resorts Limited Crown Resorts Limited (Operating Company) International Company (Newly Listed Entity) Real Estate Investment Trust Melbourne (100%) Perth (100%) Sydney (100%) Aspinalls (100%) CrownBet (62%) Betfair (100%) DGN Games (70%) Melco (27.4%) Alon ( majority ) Aspers (50%) Nobu (20%) Source: Company Reports, BondAdviser The credit outlook for Crown is tied to the uncertainty surrounding its large capital expenditure pipeline (Including Alon Las Vegas and the Melbourne Queensbridge Hotel Tower) and how the group intends to fund these projects without increasing leverage above rating agency maximums (note that a breach of these maximums would enforce mandatory deferral of interest payments on the subordinated notes). The proposed demerger (property trust yet to be approved the board) is expected to relieve some of this funding pressure and this is further supported by the sell down of its stake in Melco Crown (Macau casino interests) and subsequent reduction in debt. As a result of the group s improved credit profile and more sustainable balance sheet, we are now more confident in the group s ability to redeem both subordinated note issues at their expected call dates (September 2018 and July 2021). We remain cautious of Crown s ability to maintain stable credit metrics through this new period of growth primarily because it will be subject to funding, project development (and budget blowouts) and earnings risks. However, Crown is in a much better position now than a year ago and we believe they will be more conservative in the future. Nufarm Subordinated Step-Up Securities (ASX: NFNG) Although we do not currently have a buy recommendation on this security, we believe there is still capital upside. The global argi-chemical sector is currently in a state of consolidation and market participants are moving swiftly to gain market share, create synergies and cut costs. As Nufarm is majority owned by Japanese group Sumitomo Chemical Company (23%) any potential takeover bid must comply with the shareholder deed between the two companies. Under this documentation, a come-along obligation can be triggered whereby Sumitomo s ability to block becomes void. In this event, Sumitomo must either match the takeover bid or sell into it. We estimate a price of ~$ per share must be offered for a Triggering Event to occur which translates to a premium of ~35-45% from the 20-Day Volume Weighted Average Share Price (VWAP). If we consider recent corporate activity in the sector including the ~30% premium ChemChina paid for global Swiss agribusiness Syngenta in February and the potential ~45% premium Bayer may pay for American group Monsanto (if the merger is approved by regulators), then a Nufarm takeover seems to be a reasonable proposition. However, given management s recent comments regarding potential acquisitions and the cyclical nature of the business we remain cautious until more information regarding corporate activity comes to light. 17 Bond Adviser Pty Ltd

18 Figure 27. Current Prices and Distributions Ticker AGLHA AQHHA CTXHA CWNHA CWNHB GMPPA MXUPA NFNG ORGHA RHCPA SVWPA TAHHB WOWHC Gross Price $ $ $ $99.20 $87.50 $99.60 $70.70 $88.00 $99.50 $ $70.67 $ $ Accrued $0.33 $0.00 $0.26 $0.30 $0.25 $0.00 $0.00 $2.89 $0.13 $3.26 $2.30 $0.13 $0.51 Capital Price $ $ $ $98.91 $87.25 $99.60 $70.70 $85.11 $99.37 $ $68.38 $ $ Yield to Maturity 4.471% 4.652% 3.934% 7.462% 9.254% 6.208% 8.731% 7.267% 8.530% 7.014% % 4.081% 4.988% Trading Margin 2.622% 2.775% 2.030% 5.606% 7.371% 4.309% 6.455% 4.984% 6.796% 4.731% 8.003% 2.141% 3.291% Running Yield 5.370% 6.090% 6.270% 6.820% 6.580% 5.670% 7.980% 7.470% 5.770% 7.190% % 5.690% 4.980% Distribution Margin (p.a.) 3.800% 4.500% 4.500% 5.000% 4.000% 3.900% 3.900% 3.900% 4.000% 4.850% 4.750% 4.000% 3.250% Current Distribution Rate (p.a.) 5.520% 6.230% 6.240% 6.743% 5.743% 5.630% 5.860% 6.355% 5.740% 5.117% 4.806% 5.735% 4.980% Franking 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 100% 0% 0% Gross-Up Yield (p.a.) 5.520% 6.230% 6.240% 6.743% 5.743% 5.630% 5.860% 6.355% 5.740% 7.310% 6.865% 5.735% 4.980% Next Ex-Date 29/11/ /12/2016 6/12/2016 5/12/2016 5/12/ /12/ /09/2016 6/10/ /12/2016 5/10/ /11/ /12/ /11/2016 Next Record Date 30/11/ /12/2016 7/12/2016 6/12/2016 6/12/ /12/ /09/2016 7/10/ /12/2016 6/10/ /11/ /12/ /11/2016 Next Payment Date 8/12/2016 3/01/ /12/ /12/ /12/2016 3/01/ /10/ /10/ /12/ /10/ /11/ /12/ /11/2016 Next Cash Distribution $1.376 $ $1.556 $1.680 $1.430 $1.419 $1.470 $3.186 $1.430 $2.566 $2.409 $1.430 $ Estimates Source: BondAdviser, Company Reports as at 30 th of September 18 Bond Adviser Pty Ltd

19 Company Profiles 19 Bond Adviser Pty Ltd

20 Sep-2015 Oct-2015 Nov-2015 Dec-2015 Jan-2016 Feb-2016 Mar-2016 Apr-2016 May-2016 Jun-2016 Jul-2016 Aug-2016 Sep-2016 Headroom ($m) EBITDA/Net Interest Headroom ($m) Net Debt/EBITDA Corporate Hybrids 2017 Handbook Interest Deferral Covenants AGL Energy Leverage Ratio (Less than 3.0x) 3,000 2,500 2,000 1,500 1, x 1.5x 1.0x 0.5x 0.0x AGL is one of Australia s largest utility groups, generating and distributing electricity and gas to both retail and wholesale markets. It buys and sells natural gas, electricity, and energy-related products and services and constructs and/or operates power generation and energy processing infrastructure. In recent years, volatility in commodity prices has made exploration and production complex and number of projects are arguably no-longer viable. AGL did not overly commit to its gas business and as a result, the group made the strategic decision that natural gas assets will no longer be a core business. As a result, AGL has refocused on its core operations of generating and distributing energy and has left the company in a better financial position than its major competitors (i.e. Origin Energy). Interest Cover Ratio (Greater than 4.0x) Headroom Net Debt Headroom EBITDA Leverage Ratio Overall, their ability to maintain a strong operating performance during a period (last 5 years) where electricity demand has fallen in Australia is a testament to management and we expect the group to move to a less carbon-intense portfolio over time. We note that AGL recently discontinued its rating with S&P and any equity credit once attributable to AGLHA is no longer available. However, under the legal documentation, the notes cannot be called prior to the scheduled call date in June Headroom EBITDA Headroom Net Interest 14.0x 12.0x 10.0x 8.0x 6.0x 4.0x 2.0x 0.0x Hybrid ASX: AGLHA Size $650m Issue Date 04/04/2012 First Call Date 08/06/2019 Maturity Date 08/06/2037 Interest Margin 3.80% p.a. Trading Margin Performance LTM 4.00% 3.75% 3.50% 3.25% 3.00% 2.75% 2.50% 2.25% 2.00% Interest Cover Ratio Frequency Quarterly AGL Energy Summary Financials (A$m) Year ended 30 June H16 Revenue 10,308 10,533 11,150 Capital Structure Operating EBITDA 1,330 1,505 1,689 Secured Finance Leases 19 Net interest Unsecured Bank Loans 1,228 Operating Cashflow 699 1,044 1,186 Unsecured Other Loans 167 Dividends paid Unsecured USD Notes 463 Capex Unsecured Domestic Notes 597 Free cash flow Subordinated Debt (Hybrid) 650 Total Debt 3,124 Interest Deferral Covenants Deferred Borrowings Costs 16 Relevant Net Debt/EBITDA (x) Foreign Currency Hedges -157 EBITDA/Relevant Net Interest (x) Adjusted Debt 2,983 Cash & Liquids -252 Credit Metrics Adjusted Net Debt 2,731 Net Debt/EBITDA (x) Equity 7,926 Interest Coverage (x) Gearing (%) Liquidity facilities Adj. Dividend Payout Ratio (%) Cash & Liquids 252 Net Debt to Equity (%) Revolving Bank Debt 665 Total Liquidity 907 Source: Company Data, BondAdviser Estimates 20 Bond Adviser Pty Ltd

21 Sep-2015 Oct-2015 Nov-2015 Dec-2015 Jan-2016 Feb-2016 Mar-2016 Apr-2016 May-2016 Jun-2016 Jul-2016 Aug-2016 Sep-2016 Headroom ($m) Interest Cover Headroom ($m) Gearing Corporate Hybrids 2017 Handbook Bank Facility Covenants APA Group Gearing Ratio (Less than 75%) Interest Cover Ratio (Greater than 1.1x) Headroom Net Debt Headroom Equity Gearing Ratio 70.0% 65.0% 60.0% 55.0% 50.0% 45.0% 40.0% 3.00x 2.75x 2.50x 2.25x 2.00x Headroom Adj. EBITDA Headroom Net Interest Interest Cover Ratio APA is an Australian utility group which owns and operates natural gas assets (valued at $19 billion). APA s primary business is its pipelines (division known as Energy Infrastructure) but the group also has interests in gas storage facilities, gas-fired power stations and wind farms. The majority of group revenue is derived from capacity charge contracts (75%) which is fixed over the term of the agreement. The Eastern Australian gas market has been subject to unprecedented change with the renewal of long term gas supply arrangements and commencement of all LNG projects in Gladstone. As a result, regulating entities have begun a series of reviews into the sector. A key recommendation made by the ACCC was to revisit the regulatory coverage of pipelines as the report found pricing was largely unconstrained by either threat of regulation or effective competition. Over the long term, APA s market power and earnings growth is likely to diminish as the regulatory scope for gas transmission increases but the end result should ultimately lead to less leverage, more risk controls and increased cashflow transparency which is a positive for credit investors. We do not expect APA to reflect the same level of acquisitive behaviour as displayed in the past few years (ACCC likely to block) and leverage should progressively decrease over time. Hybrid ASX: AQHHA Size $515m Issue Date 18/09/2012 First Call Date 31/03/2018 Maturity Date 30/09/2072 Interest Margin 4.50% p.a. Trading Margin Performance LTM 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% Frequency Quarterly APA Group Summary Financials (A$m) Year ended 30 June H16 Revenue 1,332 1,540 2,074 Capital Structure Operating EBITDA ,331 Unsecured Bank Loans 708 Net interest Unsecured Non-AUD Notes 7,826 Operating Cashflow Unsecured Domestic Notes 615 Dividends paid Unsecured Other 107 Capex Subordinated Debt (Hybrid) 515 Free cash flow Total Debt 9,771 Deferred Borrowings Costs 47 Bank Facility Covenants Foreign Currency Hedges -687 Adj. Gearing (%) Adjusted Debt 9,037 Adj. EBITDA/Net Interest (x) Cash & Liquids -85 Adjusted Net Debt 8,953 Credit Metrics Equity 4,029 Net Debt/EBITDA (x) Interest Coverage (x) Liquidity facilities Gearing (%) Cash & Liquids 85 Dividend Payout Ratio (%) Syndicated Bank Facilities 669 Net Debt to Equity (%) Total Liquidity 754 Source: Company Data, BondAdviser Estimates 21 Bond Adviser Pty Ltd

22 Sep-2015 Oct-2015 Nov-2015 Dec-2015 Jan-2016 Feb-2016 Mar-2016 Apr-2016 May-2016 Jun-2016 Jul-2016 Aug-2016 Sep-2016 Corporate Hybrids 2017 Handbook *No Reported Covenants Caltex Australia As the largest listed oil refiner in Australia you would expect that this volatility in energy prices would impact Caltex s bottom line. The reality is the opposite as in effect Caltex is now purely a refiner and distributor. The group operates one oil refinery, the Lytton refinery in Brisbane that primarily produces petrol, diesel and jet fuel. Along with other products bought on the open market, Caltex then markets and distributes these products across retail and commercial channels. As a result, the company operates in two distinct segments: Lytton and Supply & Marketing. As refiner margins have returned to a more sustainable range, Caltex have outlined a key strategy moving forward will be enhancing their convenience store experience in attempt to engage their next stage of earnings growth. Given the opportunity for strategic acquisitions (i.e. Woolworths, BP and 7-Eleven), debt funded consolidation could pose a risk to Caltex s credit profile. However, due to the group s strong market share in this industry (18% retail and 35% wholesale), we believe any corporate activity would be heavily scrutinised by the ACCC. In terms of the group s core business (refining and distribution) we believe Caltex is implementing the correct procedures and policies to protect product margins. As a result, a steady earnings trajectory should be attainable as the supply chain efficiencies are realised and a more optimal product mix is implemented. Hybrid ASX: CTXHA Size $550m Issue Date 05/09/2012 First Call Date 15/09/2017 Maturity Date 15/09/2037 Interest Margin 4.50% p.a. Trading Margin Performance LTM 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% Frequency Quarterly Caltex Australia Summary Financials (A$m) Year ended 31 December LTM 1H16 Revenue 24,321 20,027 18,792 Capital Structure Operating EBITDA 409 1, Secured Finance Leases 1 Net interest Unsecured Bank Loans 15 Operating Cashflow ,021 Unsecured Domestic Notes 150 Dividends paid Subordinated Debt (Hybrid) 546 Capex Total Debt 712 Free cash flow Deferred Borrowings Costs 4 Adjusted Debt 716 Credit Metrics Cash & Liquids -19 Net Debt/EBITDA (x) Adjusted Net Debt 693 Interest Coverage (x) Equity 2,630 Gearing (%) Dividend Payout Ratio (%) Liquidity facilities Net Debt to Equity (%) Cash & Liquids 19 Syndicated Bank Facilities 850 Inventory Facility 235 Total Liquidity 1,104 Source: Company Data, BondAdviser Estimates 22 Bond Adviser Pty Ltd

23 Headroom ($m) EBITDA/Net Interest Headroom ($m) Gross Debt/EBITDA Corporate Hybrids 2017 Handbook Interest Deferral Covenants Crown Resorts Leverage Ratio (Less than 5.0x) 1,400 1,200 1, x 3.0x 2.5x 2.0x 1.5x 1.0x 0.5x 0.0x Crown Resorts is a multinational gaming and entertainment group that has interests predominantly in casinos. Wholly owned assets include Crown Melbourne and Crown Perth in Australia, and Crown Aspinall s in London. Another significant interest in the group s portfolio is its Melco Crown Entertainment investment. Melco Crown operates casino and hotel properties in Macau. The group also has a wagering division. The credit outlook for Crown is tied to the uncertainty surrounding its large capital expenditure pipeline (Including Alon Las Vegas and the Melbourne Queensbridge Hotel Tower) and how the group intends to fund these projects without increasing leverage above rating agency thresholds. Headroom Gross Debt Headroom EBITDA Leverage Ratio Interest Coverage Ratio (Greater than 3.0x) In June 2016, Crown released its initiatives to enhance shareholder value to relieve some of this funding pressure. The proposal included a demerger and a potential public offering of a 49% interest in a property trust. The proposed demerger work is ongoing and the timeline is likely to remain long (originally 6-9 months from announcement). The end result is likely to lead to lower leverage and greater debt headroom (to fund projects) while maintaining the group s credit rating. Management have commented that the board has approved the demerger but is yet to approve the property trust x 8.0x 6.0x 4.0x 2.0x 0.0x Hybrids ASX: CWNHA ASX: CWNHB Size $532m $630m Issue Date 14/09/ /04/2015 Trading Margin Performance LTM 20.00% 15.00% 10.00% Headroom EBITDA Headroom Net Interest Interest Cover Ratio First Call Date 14/09/ /07/2021 Maturity Date 14//09/ /04/ % 0.00% Interest Margin 5.00% p.a. 4.00% p.a. Crown Resorts Summary Financials CWNHA CWNHB (A$m) Year ended 30 June H16 Revenue 3,094 3,484 3,616 Capital Structure Operating EBITDA Secured Finance Leases 128 Net interest Unsecured Bank Loans 76 Operating Cashflow Unsecured EUR Notes 175 Dividends paid Unsecured Domestic Notes 750 Capex Subordinated Debt (Hybrid) 1,133 Free cash flow Total Debt 2,261 Deferred Borrowings Costs 29 Interest Deferral Covenants Adjusted Debt 2,290 Relevant Gross Debt/EBITDA (x) Cash & Liquids EBITDA/Relevant Net Interest (x) Adjusted Net Debt 1,991 Equity 5,152 Credit Metrics Net Debt/EBITDA (x) Interest Coverage (x) Liquidity facilities Gearing (%) Cash & Liquids 450 Dividend Payout Ratio (%) Undrawn Bank Facilities 1,289 Net Debt to Equity (%) Total Liquidity 1,739 1 Adjusted for working capital requirements Source: Company Data, BondAdviser Estimates 23 Bond Adviser Pty Ltd

24 Sep-2015 Oct-2015 Nov-2015 Dec-2015 Jan-2016 Feb-2016 Mar-2016 Apr-2016 May-2016 Jun-2016 Jul-2016 Aug-2016 Sep-2016 Headroom ($m) EBITDA/Interest Expense 2H13 1H14 2H14 1H15 2H15 1H16 2H16 Headroom ($m) Adj. Liabilities/Adj. Assets Corporate Hybrids 2017 Handbook Senior Debt Covenants Goodman Plus Trust (Goodman Group) Gearing Ratio (Less than 55%) Headroom Net Liabilities Interest Coverage Ratio (Greater than 2.0x) 30% 25% 20% 15% 10% 5% 0% Headroom Net Tangible Assets Gearing Ratio Goodman Plus Trust is ultimately a subsidiary of Goodman Group by whom it is guaranteed (see Appendix 2). Goodman is a multinational property group that develops and manages primarily industrial real estate. The group is divided into three segments, its property portfolio, its development business and its funds management platform. Goodman operates in Australia, the Asia Pacific, Europe and the Americas and investments span across a range of joint-ventures and wholly owned assets. As a general rule, property groups that are involved in development activities are typically higher risk than groups that purely manage and invest. As a result, the group is currently in transition and shifting away from direct property development to a more capital light managed partnership structure. This effectively means the group shares the upside of projects in partnership but take less balance sheet risk. On a consolidated basis (including off balance sheet debt inherent in joint project structures) the group s leverage is higher than reported but through partnerships and subsequent risk diversification each dollar of additional debt is yielding a greater proportion of earnings (through fee structures). This has lead Goodman to reduce its debt position while improving its cash balance which we believe is the correct capital management policy at this point in the global real estate cycle (capitalisation rate compression slowing) Headroom EBITDA 7.00x 6.50x 6.00x 5.50x 5.00x 4.50x 4.00x Headroom Interest Expense Hybrid ASX: GMPPA Size $327m Issue Date 21/12/2007 First Call Date 30/09/2017 Maturity Date Perpetual Interest Margin 3.90% p.a. Trading Margin Performance LTM 6.00% 5.50% 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% Interest Cover Ratio Frequency Quarterly Goodman Group Summary Financials (A$m) Year ended 30 June H16 Revenue 1,183 1,185 1,714 Capital Structure Operating EBITDA Secured Bank Loans 65 Net interest Secured Foreign Notes 95 Operating Cashflow Unsecured Bank Loans 307 Dividends paid Unsecured Foreign Notes 2,427 Capex Total Debt 2,894 Free cash flow Deferred Borrowings Costs 28 Partnership Debt (Off-Balance Sheet) 2,427 Senior Debt Covenants Adjusted debt 5,349 Net Liabilities/Net Tangible Assets (%) Cash & Liquids 1,337 EBITDA/Net Interest (x) Adjusted net debt 4,012 Preference Shares (GMPPA) 327 Credit Metrics Other Equity 8,066 Net Debt/EBITDA (x) Total Equity 8,393 Interest Coverage (x) Gearing (%) Liquidity facilities Dividend Payout Ratio (%) Cash & Liquids 1,337 Net Debt to Equity (%) Revolving Bank Debt 1,258 Total Liquidity Debt adjusted for off-balance sheet managed partnership debt. Source: Company Data, BondAdviser Estimates 24 Bond Adviser Pty Ltd