AFIN8099 Current issues in Banking and Finance
Task:
1.Which is the smallest? Sydney Airport? 1&7 are Coles, Right?
Which is the largest? Telstra?
The outcome is in line with the assumption made in Question 1. Due to the COVID-19 pandemic, governments implemented lockdown measures to contain the spread of coronavirus. People were forced to adopt stay-at-home and work-from-home, then they required more data and faster speed in mobile and broadband services to sustain the new way of working or entertaining. Greater demand has generated higher service revenue for the network provider. While the network providers have been benefited, travel bans imposed by different countries negatively impacted the usage of airports and transportation around the world. The Sydney Airport is one of the victims, as the temporary service suspension affected its operational cash flow. This would further hinder the financial health of the company.
2.1. Compute the duration and spread duration of our portfolio: Fixed: MD; FRN: SD
-Duration (Week 3 Note P.10)
-Spread Duration (Week 3 P.11) Can be found on Refinitiv Eikon on the page of valuation
2. Calculate the Sensitivity according to different changing level (Week 3 P.14)
3. Again, looking for data on Refinitiv Eikon in the description page
-Portfolio credit rating and default probability(Week 3 P.13)
Compare the figure of our portfolio with the credit rating, e.g. if our portfolio lies on 5.2%, it resembles as ‘BBB’ , i.e.5%
4. Search the detail of the CDS ‘ITAAU5Y= Q’ for the CDS spread and the recovery rate in the left-handed corner of Refinitiv Eikon under the ’Latest’ heading; Calculation refers to Week 2 P.43- 49, remember to convert the annual rate into quarter rate (1+r%/4)^4 = 1+R, or simply divide the annual payment into 4 quarterly payments
