Good morning,

The equity markets are understandably focused on the action in Origin Energy – but the bond guys are also paying close attention.

It’s been a wild ride for bondholders since the competition regulator cleared the near multibillion Brookfield-EIG takeover deal. Bonds rallied on news, netting credit traders a good chunk of cash, boosted again by the consortium sweetening their bid earlier this month.

But AustralianSuper’s rejection put a spanner in the works and the bonds tanked. Now, with two major proxy firms backing the proposal, and Origin agreeing to waive the standstill agreement that restricted Brookfield and EIG from buying shares, bonds are rallying again.

Origin’s €600 million 2029 eurobonds are now trading at 91¢/93¢ in the dollar. Analysts reckon if the deal falls through, the bonds would drop to 81¢ in the dollar.

That’s the price they would trade if there was no prospect of an early return of capital – given the bonds were issued in a period of negative interest rates and pay a paltry 1 per cent annual coupon.

Origin’s local $A 2027 bonds allowed credit traders a lower octane version to bet on the deal closing. The $300 million of bonds pay a 2.65 per cent coupon and will drop to 89¢ in the dollar if the deal falls through. If it closes investors can lock in a 4.5 to 4.8 per cent gain.

Whatever happens, credit traders have enjoyed the ride and had something to speculate on in the relatively safe and sterile Australian corporate bond market where special situations are few and far between.

Happy reading,

• CleanPeak Energy gets busy in the ACT; adds 3 solar farms to its portfolio
• Bids roll in for Synlait‘s Dairyworks
• Trading frenzy in Origin Energy shares
• It’s out! Barrenjoey, Macquarie take top spots in Peter Lee survey
• Wildcat Resources launches $80 million equity raise after Mineral Resources’ arrival
• Lowy-backed Assembly restocks war chest with second $350 million fund

• Moody’s has warned buy now, pay later companies will struggle to survive, writes Jonathan Shapiro.
• A discovery outside Sheridan, Wyoming could be America’s first new source of rare-earth elements since 1952, The Wall Street Journal reports.
• JPMorgan Chase & Co is working with US regulators and walking them through its first set of generative AI pilot projects, Bloomberg reports.

Synlait’s share price has fallen 57 per cent this year to $1.25.

Click here for the latest equity market wrap.