The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) managed to post another positive day, closing up 0.8% at 5,370.7 points, following yesterday's 3.3% surge.
Australia's big four banks Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) led the gains – with all four up by more than 2.5%, and NAB up more than 4%.
But it hasn't all been good news amongst the blue chips.
These 4 companies all saw their share prices finish in the red – and it was virtually the same reason for all of them.
Company | Share Price | Market Cap ($m) | Price move |
Telstra Corporation Ltd (ASX: TLS) | $4.72 | $56,373 | -2.7% |
Transurban Group (ASX: TCL) | $9.58 | $19,569 | -3.1% |
Westfield Corp Ltd (ASX: WFD) | $8.42 | $17,497 | -0.8% |
Scentre Group (ASX: SCG) | $4.10 | $21,829 | -1.7% |
Source: Google Finance
Guess what they all have in common?
If you guessed they are higher-yielding stocks then you are partly right. And the real reason they are on the nose right now? Because they also have bucketloads of debt, bond yields are rising and they are mainly yield plays. In other words, they typically don't generate much growth and investors are attracted by their dividend payouts.
That means more competition as investors switch to bonds and other fixed interest assets. It also means that all four companies face higher interest repayments in future.
Here are their relevant debt details.
Company | Total Debt | Cash | Net Debt |
Telstra Corporation Ltd (ASX: TLS) | $16bn | $3.5bn | $12.5bn |
Transurban Group (ASX: TCL) | $12.9bn | $0.8bn | $12bn |
Westfield Corp Ltd (ASX: WFD) | $7.5bn | $0.6bn | $6.9bn |
Scentre Group (ASX: SCG) | $11.4bn | $0.2bn | $11.2bn |
Source: Company reports
Westfield also recently reported falling sales growth to just 2.2%. Scentre – which owns the Westfield shopping malls in Australia and New Zealand – reported decent growth of 3.4% for the year to September 2016.
Telstra has its own issues with a huge earnings hole it is trying to fill and Transurban has seen its share price sink by 9.5% in the past month as investors fall out of love with equity market 'bond proxies' – the yield plays like Transurban.