The Australian Corporate Bond Company has launched a fixed income solution that allows retail investors access to wholesale corporate bond market returns on the Australian Securities Exchange (ASX).
Exchange Traded Bond Units (XTBs) allows individuals, their brokers, and financial advisers to access returns from specific bonds issued by top 50 ASX-listed companies through the ASX.
Lonsec research said XTB is a "legitimate means of eliminating some of the barriers faced by retail investors seeking to access the Australian corporate bond market and believes this initiative is a significant development".
Each XTB offers investors an ASX-tradable security which keeps tabs on the performance of a specific underlying bond after fees and expenses with no minimum investment.
Investors can select 17 corporate bonds with different yields and maturity, and all coupons and principal re-payments made by the bond issuers go to the XTB investor.
"Until now individual investors, including many SMSFs, have been heavily reliant on term deposits for predicable, stable returns," chief executive of ACBC, Richard Murphy said.
"But with interest rates at historical lows — and expected to remain low - we saw a definite gap in the market and have identified a solution that can form part of the broader development of the corporate bond market."
At the moment, the XTBs will offer senior bonds from Bluechip companies such as BHP, Telstra and Woolworths, with the underlying corporate bonds paying coupons of between 3.75 per cent to 8.25 per cent per annum.