Click to sign up for our Free Fixed Income Newsletter

See our high yielding, short fixed income portfolios FX1, FX2 and FX3.


Call Toll Free 877-359-5319.  

Australia Bond
Developed Markets Bond

 

We have identified a short term A- rated Goldman Sachs floating rate bond denominated in the Australian dollar and are targeting 8.50% yield to maturity for our clients.

Corporate Bond linked to the Australian Dollar

Goldman Sachs has a floating rate debt issue denominated in Australian dollars, which resets its coupon rate quarterly at the Australian Bank Bill Swap Reference Rate (BBSW) plus 0.51%, matures in 41 months, and currently indicates a yield to maturity about 8.50%. The high yield and short maturity of this Aussie bond, when considered with its solid A- rating and enviable position, compares extremely favorably in relationship to other high yield instruments in our Foreign and World Fixed Income holdings, and we consider the recent strength of the US dollar relative to the Aussie dollar a great opportunity for increasing exposure to the Australian currency in our basket of foreign fixed income holdings. We believe the dollar’s longer term weakening trend against many world currencies remains a major concern for investors seeking protection against its devaluation and a further erosion of its buying power, and we share the concern of our clients in protecting existing wealth by utilizing the higher yields of sound issuers in many the world’s strongest economies.

Wealth Preservation Concerns

The equity and commodity markets continue thrashing about with no consistent or clear direction, and wealth preservation remains a top priority for many people. Declining equity and property prices, ultra-low interest rates, minimal pay raises, elevated inflation, ineffective politicians, potentially increased taxes, and the Fed’s constant printing of more money in what may be an effort to not only backstop the US economy but also that of Europe, have all precipitated into a widespread erosion of wealth that will likely continue until the aforementioned conditions begin to change.

With the Euro-Region Economic confidence falling to a two year this week, talks in Brussels have moved towards forcing the 17 countries that use the euro to cede control of their sovereign spending to a central authority. Whether or not that is what is destined, it’s likely there will be more bumps along the way that allow for (or perhaps necessitate) the printing of more US dollars to insure the current financial system’s survivability. Interestingly, the increase in US money supply has recently been accelerating. Up over 50% in less than 4 years (or about 11% per year), the more recent trends indicates a year over year increase over 20%, a 26 week rate indicating over 25%, and a 13 week rate indicating over 30%. At these accelerated rates, by 2015 perhaps a debt of only $17.6 trillion will quite magically appear as “reduced” according to most any politician’s measure and the “banksters” will be ready for their next round of fleecing.

Here at Durig Capital, we have undertaken the effort to protect our client’s assets against the persistent destruction associated with an ever increasing supply of federal dollars, by scouring the globe in search of sound investments in the strongest global economies, and it is why we have chosen Goldman Sachs floating yield, short term Aussie bond as This Week’s Best Bond.

Australian Economy

Australia’s abundant and diverse natural resources include extensive reserves of coal, iron ore, copper, gold, natural gas, uranium, and renewable energy sources. It also has a large services sector and is a significant exporter of natural resources, energy, and food. Key tenets of Australia’s trade policy include support for open trade and the successful culmination of the Doha Round of multilateral trade negotiations, particularly for agriculture and services.

The Australian economy grew for 17 consecutive years prior to the global financial crisis. Subsequently, the Rudd government introduced a fiscal stimulus package worth over US$50 billion to offset the effect of the slowing world economy, while the Reserve Bank of Australia cut interest rates to historic lows. These policies – and continued demand for commodities, especially from China – helped the Australian economy rebound after just one quarter of negative growth. The economy grew by 1.2% during 2009 – the best performance in the OECD – and by 3.3% in 2010. Unemployment peaked at 5.7% in late 2009 and fell to 5.1% in 2010. As a result of an improved economy, the budget deficit is expected to peak below 4.2% of GDP and the government could return to budget surpluses as early as 2015.

Although Australia has experienced persistent deficits since World War II, the estimated 2010 deficit of $30.4 billion, a mere 2.46% of GDP, bringing the total outstanding public debt to 22.4 % of GDP (2010 est.) The 2010 inflation rate stood at 2.9%, with current unemployment rates about 5.1%. Exports exceeded imports to the tune of 10.3 billion, with partners China, Japan, South Korea, and India all listed ahead of the US. The longer term outlook remains good as Australia’s terms of trade appear to have reached record peaks with prices for key export commodities staying high thanks to voracious demand from China and the rest of Asia.

Public debt to GDP

Budget Deficit

Exports

Imports

Australia in A$

22.4%

A$ 20.3 billion

210 Billion

200 Billion

United States in USD

100.0 % US$ 1.294 Trillion 1.28 Trillion 1.94 Trillion

Stanford University has rated the Australian economy number #1 on its global Sovereign Fiscal Responsibility Index. This recognition helped highlight how much stronger Australia’s financial condition is compared to #28 ranked (out of 34) United States, which came in only four points above a defaulted Iceland.

Australian dollars (AUD) per US dollar -

0.9771 (current)

1.0902 (2010)

1.2822 (2009)

1.2059 (2008)

1.2137 (2007)

1.3285 (2006)

About Goldman Sachs

The Goldman Sachs Group, Inc. is a global leader in investment banking and securities who engages in investment banking, buying and selling securities, asset management and many other financial services focusing on institutional clientele and high net worth individuals. Goldman Sachs’ headquarters is located at 200 West Street, New York, and was founded in 1869. Former employees include Robert Rubin and Henry Paulson, who both served as the United States Secretary of the Treasury after resigning from Goldman Sachs, thus the nickname “Government Sachs”.

Liquidity is of critical importance to companies in the financial services sector, and most failures of financial institutions have occurred in large part due to insufficient liquidity. Accordingly, Goldman Sachs has in place a comprehensive set of liquidity and funding policies that are intended to maintain significant flexibility to address both Goldman Sachs-specific and broader industry or market liquidity events. Management stated principal objective is to be able to fund Goldman Sachs and to enable their core businesses to continue to generate revenues, even under adverse circumstances.

To finance the firm’s business, Goldman Sachs issues various types of short and long term securities, including promissory notes, commercial paper, medium term notes and global bonds. It currently has about $ 835Bn in cash, $ 492Bn in debt, and its International bonds are solid Investment grade quality, being A- rated by S&P.

Goldman Sachs domiciled bond Yield Maturity Rated
US Dollar 4.70 % 06/22/2016 A-
Australia Dollar 8.30 % 04/12/2016 A-

Risks

The default risk is Goldman Sachs’ ability to perform. Given their strong cash position, financial strength and evidently close political connections, it is our opinion that the default risk for this short to medium term bond is minimal relative to the currency risk of the Aussie dollar.

The currency risk of the Aussie dollar could and will affect the returns of these bonds and possibly in a negative way as it exposes investors to the Australian economy.

Allotments

Many people ask, how do I invest in Australian Corporate bonds? With most firms it often requires an institutional sized single bond purchase. To circumvent this constraint and allow greater diversification, we at Durig Capital combine world bond buyers into a larger institutional sized purchase. In our previous syndicates, we were able to facilitate purchases as low as $10,000 US Dollar and should be able to do the same for your interest.

Conclusion

We continue to search for individual corporate instruments denominated in the currencies of growing economies that yield higher than average returns to help protect our clients against the erosion of wealth that results from a constant devaluation of the US dollar. We acknowledge that a stronger US dollar would directly reduce the total returns of this Aussie bond. Conversely, if the US dollar continues on the longer term path of relative weakness to the Australian dollar that it has been on, this alone would add significantly to the already highly positive accruing returns of this bond.

Considering Australia’s long term position as a stable economy and political system with shrew fiscal management will likely correlate with a stable and possible strengthening of the commodity based Australian dollar relative to the US dollar, we view the gaining of over 75% more yield from such a reputable issuer as Goldman Sachs as an incredibly compelling reason for choosing their Kangaroo bond over their similar Yankee (US dollar) bond. The combination of offering a remarkably high yield, some protection against a further loss of wealth with a continuation of the US dollar’s weakness against the Aussie dollar, and a diversification away from heavily overweight US dollar based assets into one of the world’s top tier fiscally conservative countries is why we are adding it at this time to our Foreign and World Fixed Income holdings.

Disclosure:

Durig Capital clients may currently own these bonds.

To know more about this Investment call our specialist at 971-327-8847

 Durig Capital LLC BBB® Accredited Business SealBBB® Accredited A+ Rating

On a scale of A+ to F

Reason for Durig A+ Rating

 

Durig.com | Bond-Yields.com

 

Sign up for our Free Newsletter:

Your Name *

Your Daytime Phone*

Your Email *

* Indicates required

Subject
Free Newsletter Sign-Up. Yes! I want to receive Durig's Income investment e-mails.

 

Share

4 Comments

  1. ISIN or CUSIP of these 8.5% GS australian bonds?

  2. Hi Jack

    Thanks for the question.

    The Cusip is ZZC239SU0

    I hope this helps if not let me know.

  3. is there any withholding or other taxes on these aussi bonds? thanks in advance-mike

  4. Hi Mike great question, No foreign tax US Income tax applies like on a CD’s or corporate bond.

 

Information on this website is provided for informational purposes only and is not offered as advice with respect to any particular security or related financial instrument. This information should not be used as a basis for making an investment decision and must not be treated as a substitute for seeking advice from a licensed professional. The suitability of a given investment for a particular investor depends on a number of factors, each of which should be considered carefully. Such factors include, but are not limited to, the risk associated with the investment, the nature of current market conditions, and the investor’s objectives, personal needs, and specific circumstances. This is neither a solicitation to buy nor an offer to sell to persons in Texas

 
Providing Global High Institutional Yields for our Investors !
A low fee income service. Providing High Quality Fiduciary Services at Very Low Prices Investment-Income.net | 11600 SW 69th Avenue | Tigard, Oregon 97223 971-732-5119 Direct | 877-720-3010 Toll Free | 971-732-5121 Fax
 
Durig Capital has the highest A+ Rating with the BBB | The Disclaimer *This site is owned by Durig Capital, LLC (Durig.com), a Registered Investment Fiduciary.
.
We're working endlessly, to provide you with the premier Global Fixed Income services. Our goal is to seek out and identify many of the Globes and US best yielding investments, providing updated fundamental research on several high yielding bonds, that with our low cost assistance, clients can broadly diversify their fixed income portfolio while at the same time often greatly increasing their yields. We identify, research and place bonds repeatability at the higher yielding institution levels, often sidestepping costly traders and middlemen providing a direct service at a very low fee. This service has allowing our clients to achieve both a much higher income combined with far greater diversification. We hear stories daily, about how investors have looked for years on the internet for help, in their global pursuit to diversify their portfolio utilizing high yielding individual international bonds, and they were excited to finally identify a fiduciary firm that was able to help them to achieve their income goals. With our personal attention, depth in knowledge, and our many outstanding conveniences, we're better able to help you, the Income investor, achieve the real savings in time, effort, and money that you desire form a true investment fiduciary.
  call Durig.Capital