Australian Unity, the Melbourne-based health insurer and mutual fund, has launched Australia's first bond under the new "simple bond legislation", designed to make it easier for companies to -access private investors in the retail corporate bond market. 
The scheme allows for a simpler prospectus, making the bonds cheaper to issue and thus increasing the appeal for companies to issue into the retail market and by implication making them more attractive for smaller investors.
Technically, it works like this: under the simple bond regime, the bonds must be "vanilla" senior unsecured debt with no conversions, deferral of interest and no write-off or loss absorption qualities.
The bond was launched on -  November 10 with the aim of raising $200 million. Funds will be used to repay its existing bond due to mature in   April 2016, to help -finance the $114m acquisition of NSW Home Care and for general corporate use.
For interested investors the number that matters is the annual rate which this unsecured floating rate bond will pay. With interest payable quarterly based on three- month bank bill swap rate plus a margin of 2.8 per cent, it equates to an annual rate of about 5 per cent for the first quarter. Looking further out than the first quarter, the rate will obviously depend on cash rates, but as it is a floating rate bond it will always be 2.8 per cent above indicative three-month cash rates. Demand for the new bond was good, with final issuance of $230m, with $100m of new money.
Australian Unity is an attractive business diversified across three complementary sectors: healthcare, retirement living and financial services. Net profit after tax has been rising steadily in recent years and to   June 30 was $34.6m up from $29.6m the previous year. Healthcare con-tributes 57 per cent to profit (retirement living 24 per cent, fin-ancial services 16 per cent and Big Sky Credit Union 3 per cent).
I like the three complementary businesses that should offer cross selling opportunities. Strategies seem well-considered and reasonably conservative. The bond has some covenants restricting gearing and ranking of extra debt.
For additional comfort, Australian Unity has been rated by Australia Ratings as BBB+. This seems slightly high given the company's size and mutual status, but it would likely be rated investment grade given the quite stable nature and cash generating capacity of its businesses. The offer on the ASX opens on   November 17 and closes on   December 11.Elizabeth Moran is a director of education and research at FIIG Fixed Income Specialists.