Why these 4 blue chips are on the nose today

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.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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