Pacific Private Asset Management is pleased to highlight a new investment opportunity from Aurizon Holdings Limited, presented by our trusted partner Fixed Income Solutions Pty Ltd. Aurizon, one of Australia’s leading logistics and rail freight operators, is bringing its inaugural subordinated note transaction to market with a compelling yield profile and expected investment-grade credit ratings.
Key Offering Details
- Issuer: Aurizon Holdings Limited
- Guarantor: Aurizon Network Pty Ltd
- Structure: Fixed-to-Floating Rate & Floating Rate Subordinated Notes
- Expected Issue Ratings: Moody’s: Baa2 | S&P: BBB-
- Term: 30-year legal maturity, with a first call at 5.25 years (August 2030)
- Indicative Yield (Initial Price Guidance):
- Fixed Rate: 6.50–6.60% p.a.
- Floating Rate: 3m BBSW + 300–310bps (first coupon ~6.83–6.93%)
- First Step-Up: +25bps in May 2035
- Second Step-Up: +75bps in August 2050
- Coupon Deferral: Optional, with cumulative and compounding repayment (subject to dividend stopper and pusher)
- Issue Size: AUD benchmark
- Pricing Date: 9 May 2025 | Settlement Date: 16 May 2025
Why This Opportunity Stands Out
This issuance offers a rare chance to earn 6%+ yields from an investment-grade issuer, making it especially attractive in the current environment where traders are pricing in four 25bps rate cuts across the curve.
For investors seeking enhanced income, especially in fixed-rate format, this deal provides:
- Superior yield margin vs. comparable subordinated instruments
- Optionality via callable structure and step-up coupons
- Strong credit backdrop supported by long-term infrastructure assets
Credit Perspective – Fixed Income Solutions View
Aurizon recently released a trading update through April 2025, which highlighted some short-term operational challenges:
- Weather-related volume impacts in Central Queensland
- Bad debt provisions totalling $26 million (OneSteel, Centrex, Northern Iron)
- Lowered EBITDA guidance to the bottom of the $1.66–$1.74 billion range
Despite this, the company is proactively managing risk:
- Implementing $50 million in annualised cost savings (effective FY26)
- Planning a second cost-cutting phase before 30 June 2025
These initiatives suggest a mildly credit negative short-term view, but a constructive long-term outlook as operational efficiency improves. Fixed Income Solutions views the yield on offer as a notable value opportunity in today’s market.
Investor Considerations
- Expected strong demand and potential for scaling
- Participation at par ($100)
- Not listed, governed by NSW law
- Optional early redemption and coupon protections under various event scenarios
For further details or to express interest in this opportunity, please reach out to your Pacific Private Asset Management representative.