Yes. Selfwealth offers trading in all types of ASX-listed bonds, including:
- Exchange-traded Treasury Bonds (eTBs)
- Exchange-traded Treasury Indexed Bonds (eTIBs)
- Corporate bonds
You can search for and buy bonds in the Selfwealth platform in the same way as stocks. You can find the ticker codes for eTBs, eTIBs and corporate bonds linked in the sections below.
Exchange-traded Treasury Bonds (eTBs)
What are eTBs?
Exchange-traded Treasury Bonds (eTBs) provide retail investors with an accessible way to gain exposure to Australian Government-issued Treasury Bonds. Treasury Bonds are a type of debt security, meaning they pay the holder an agreed interest rate, known as the Coupon Interest Rate, at regular intervals until the Maturity Date. At maturity, the principal amount is returned to the holder along with the final Coupon Interest payment.
While Treasury Bonds are not traded on an exchange and are generally out of reach for retail investors due to their large parcel sizes, eTBs are traded electronically on the ASX with a reduced parcel size, making them a more convenient alternative for smaller investors. When you purchase eTBs, you gain beneficial ownership of Treasury Bonds in the form of CHESS Depository Interests (CDIs) (for more information on CDIs and how they function, click here). Each eTB unit provides beneficial ownership of $100 Face Value of the underlying Treasury Bond.
Where can I find a list of eTBs?
There are many eTBs listed on the ASX, each with unique ticker codes, Coupon Rates, Coupon Interest Payment Dates and Maturity Dates. These details are outlined in the term sheet issued for each eTB. You can find a full list of ASX-listed eTBs, their ticker codes and the relevant term sheets by clicking here.
How much interest is paid on eTBs and how is it paid?
The Coupon Rate will vary between individual bonds. Coupon Interest is paid twice yearly via direct credit (bank transfer), although payment dates will differ between bonds. Full details including the Maturity Date can be found in each bond's term sheet.
To receive Coupon Interest payments, you must nominate a bank account with the registrar, Computershare Investor Services, similar to how you nominate to receive dividends through a share registry. You can contact Computershare using the details below:
Telephone: +61 3 9415 4026 | 1800 674 428 (within Australia)
Email: austgovtbonds@computershare.com.au
Mail: Australian Government Bond Registrar, Computershare Investor Services Pty Limited, GPO Box 2975, Melbourne VIC 3001
What are the risks of investing in eTBs?
The Australian Government has never defaulted on interest or principal payments for Government Bonds, making eTBs a very secure investment. That being said, there are some risks associated with investing in eTBs.
The price of eTBs is determined by the market and will fluctuate over time, most strongly in response to changes in interest rates. Generally, if interest rates rise the price of an eTB will likely fall, and if interest rates fall the price will likely rise. A capital loss is possible if eTBs are purchased at a price greater than $100 or sold prior to their Maturity Date.
Exchange-traded Treasury Indexed Bonds (eTIBs)
What are eTIBs?
Exchange-traded Treasury Indexed Bonds (eTIBs) are similar to eTBs, except they are issued over Australian Government Treasury Indexed Bonds rather than regular Treasury Bonds. Treasury Indexed Bonds are capital-indexed bonds, meaning the nominal value of the bond is adjusted in line with the Australian Consumer Price Index (CPI).
Like Treasury Bonds, Treasury Indexed Bonds are generally issued in large parcel sizes and largely out of reach for retail investors. They pay Coupon Interest against the nominal (CPI-adjusted) value of the bond at a fixed rate every three months until the Maturity Date. The combination of fixed income and indexation makes Treasury Indexed Bonds an attractive option for investors looking to protect against inflation.
Like eTBs, each eTIB unit provides beneficial ownership of $100 Face Value (the initial unadjusted value) of the underlying Treasury Indexed Bond in the form of CHESS Depository Interests, making them accessible for retail investors.
Where can I find a list of eTIBs?
You can find a full list of ASX-listed eTIBs, their ticker codes and the relevant term sheets by clicking here.
Do eTIBs have any protection against deflation?
Yes. There is a floor on Coupon Interest payments designed to protect bondholders against deflation. If the Nominal Value falls below the Face Value of $100, Coupon Interest will still be calculated as if the value were $100. In the event that this floor is used, succeeding Coupon Interest payments and the principal payment at maturity will be reduced by the difference between what was paid and what would have been paid without the floor.
At the Maturity Date, the bondholder will receive either the Nominal Value or the Face Value, whichever is greater. This limits the exposure of the bondholder to deflation.
How much interest is paid on eTIBs and how is it paid?
The Coupon Rate will vary between individual bonds. Coupon Interest is paid four times yearly via direct credit (bank transfer), although payment dates will differ between bonds. Full details can be found in each bond's term sheet.
Like eTBs, eTIB holders must nominate a bank account with the registrar (Computershare) to receive their Coupon Interest payments.
What are the risks of investing in eTIBs?
Like eTBs, eTIBs are considered a highly secure investment. However, there are some risks to be aware of.
The price of eTIBs is determined by the market and will fluctuate over time, most strongly in response to changes in interest rates. Typically, if interest rates increase the price of an eTIB will likely fall, and if interest rates decrease the price will likely rise. A capital loss is possible if eTIBs are purchased at a price greater than the nominal value of the underlying bond, sold prior to their Maturity Date, or if there is a decline in the CPI.
How is income derived from eTBs and eTIBs taxed?
Any assessable income made from interest or capital gain will be liable to tax according to the
provisions of the laws of the Commonwealth and the Australian States.
If you invest in eTBs or eTIBs and do not provide details of your Tax File Number (TFN) or Australian Business Number (ABN) to the Registrar (Computershare), tax may be deducted from Coupon Interest Payments.
You will have the opportunity to provide your TFN or ABN when you contact Computershare to nominate a bank account to receive your Coupon Interest Payments.
If you require more information relating to taxation matters, you may want to speak with the Australian Taxation Office or a trusted tax professional.
Corporate Bonds
What are corporate bonds?
Corporate bonds are bonds issued by private companies for the purpose of raising capital. ASX-listed corporate bonds function similarly to eTBs, in that they pay regular interest up to the Maturity Date, at which point the full principal amount is returned. The interest rate, payment frequency and payment dates will vary depending on the individual bond.
Two types of corporate bonds are available on the ASX. Fixed-rate bonds pay a set interest rate for the entire term of the bond, meaning interest payments will not fluctuate with changes in interest rates. Floating-rate bonds, also known as Floating Rate Notes, pay a variable interest rate typically tied to the 90-day bank bill swap rate (BBSW). In most cases, the rate paid will include a fixed margin above the BBSW rate, for example BBSW plus 2.5%.
Where can I find a list of corporate bonds?
You can find a list of both fixed-rate and floating-rate corporate bonds, along with important information such as the interest rate, payment frequency and payment dates, on the ASX website by clicking here. Select Corporate at the top of the page to filter to corporate bonds only.
For further information on each bond, the ASX includes a link to the bond issuer's website. There are many different corporate bonds available on the ASX with significant differences between each, so it is important that you review the prospectus or term sheet for any bond you are considering.
For further information on each bond, the ASX includes a link to the issuer's website on the information page for each bond (example below)
There are many different corporate bonds offered on the ASX, with significant differences existing between each. As such, it's important that you familiarise yourself with the prospectus or term sheet of an individual bond (usually available through the bond issuer's website) to familiarise yourself with its terms.
How is interest paid on corporate bonds?
The interest rate, payment frequency and payment dates will vary between individual bonds. You can find more information on the ASX website or by referring to the bond issuer.
To receive interest or principal payments, you will need to nominate a bank account with the share registry managing that bond. You can find the share registry for a corporate bond in the same way you would for shares, by searching for the bond's ticker code on the ASX website and scrolling to the bottom of the company information page.
What are the risks of investing in corporate bonds?
All investments carry some risk, and corporate bonds are no exception. Generally, a bond with a higher interest rate will be more speculative and carry a higher credit risk, while a bond with a lower interest rate is considered less risky.
Fixed-rate bonds may fluctuate in price in response to changes in interest rates (an increase in interest rates will cause a decline in price, while a decrease will lead to a price increase). The pricing of both fixed and floating rate bonds is also sensitive to the perceived financial health and credit standing of the bond issuer.
There is also a liquidity risk with some corporate bonds, particularly those with a small number of units on issue, which may be difficult to sell quickly if needed due to poor liquidity on the market.
Taxation
Any assessable income from interest or capital gains on eTBs, eTIBs or corporate bonds will be subject to tax under Commonwealth and Australian State law. If you do not provide your Tax File Number (TFN) or Australian Business Number (ABN) to Computershare, tax may be deducted from your Coupon Interest payments. You will have the opportunity to provide your TFN or ABN when you contact Computershare to nominate a bank account. For further guidance, please speak with the Australian Taxation Office or a trusted tax professional.
Additional Resources:
'Investor Information Statement - Exchange-Traded Treasury Bonds' (Australian Government)
'Investor Information Statement - Exchange-Traded Treasury Indexed Bonds' (Australian Government)
'List of eTBs' including term sheets (Australian Government)
'Bonds' information page, including eTBs, eTIBs and Corporate Bonds (ASX)