Investing

What are XTBs?

An introduction to the world of XTBs

XTBs offer a new and exciting fixed income investment opportunity for all investors. They offer access to the performance and benefits of corporate bonds, which are normally not available directly for all investors.

How XTBs work

XTBs are securities traded on ASX. They bring together the predictable income and capital stability of corporate bonds, with the transparency and liquidity of the ASX market.

Individual Corporate Bonds + ASX = XTBs-min

  • XTBs give you exposure to specific, individual corporate bonds issued in the wholesale market.
  • For each corporate bond a new XTB “Class” will be quoted on ASX, each with its own ASX 6-letter code and starting with the letters YTM.
  • XTBs are units in a trust (similar to managed funds and ETFs), with each Class reflecting individual bonds held in a sub-trust.
  • Investors can select the individual bonds to which they wish to gain exposure.
  • Investors can buy and sell them on ASX, subject to liquidity.
  • Each individual XTB reflects the maturity date and coupon payment of its respective corporate bond.
  • The yield and price of each XTB is expected to reflect the yield and price of the underlying bond, after fees and expenses.
  • All XTBs mature at $100.

For example, ASX-code YTMQF3 is an XTB giving you exposure to the following Qantas corporate bond:

  • Underlying issuer: Qantas Airlines Limited (QAN)
  • Maturity date: 19 May 2022
  • Coupon: 7.75% p.a.
  • XTB Price: $121.70
  • Face Value at Maturity: $100
  • Yield to Maturity (YTMQF3) 3.21% p.a. as at 08 AUG 2017
Source: Australian Corporate Bond Company – XTB Price and YTM as at 08 AUG 2017

Key measures of a corporate bond

COUPON RATE FACE VALUE CURRENT PRICE CURRENT YIELD YIELD TO MATURITY

$100

The amount returned to investors at maturity

$121.70

The amount investors pay for this XTB on ASX

6.37%

(coupon/price) x 100

3.21%

The total return you should receive if you hold to maturity. This is the best measure for investors.

Read more on this subject, in our Insight Centre article, Bond Measures Explained.

View the full suite of XTBs, including daily updated yields and coupon payment schedules.

“XTBs provide a transparent and straight forward means to offer retail investors a choice of fixed income investments usually only available to institutional investors”.
Michael Elsworth, General Manager, Specialised Research, Lonsec Research

 

See XTBs in action

How many investments can tell you the exact income you will receive throughout the life of the investment?

XTBs provide peace of mind and let you plan your cash flow to ensure it meets your needs. Our Cash Flow Tool maps out exactly when and how much income you’ll receive so there’s no surprises along the way. You can add up to 10 XTBs to your portfolio and see how much income each one pays.

Start building your first XTB portfolio now.

Find out more in just 2 minutes

Want to know more?

Watch this video interview with CEO Richard Murphy and Peter Switzer of Sky Business, the Switzer Report.

 

Benefits and Risk of XTBs

Now you know what XTBs are, find out more about the benefits and risks associated with an investment in XTBs.

XTBs vs Term Deposits

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Infographic: What are Corporate Bonds?

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Available XTBs

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Cash Flow Tool

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