Port, railway managers' bonds are best performers in Australia

[SYDNEY] Companies managing ports, railways and roads are 2014's best Australian corporate debt performers as investors seek higher-yielding alternatives to sovereign debt that can also withstand bouts of economic weakness.

Notes from Port of Brisbane Pty and rail-freight operator Aurizon Holdings Ltd gained the most among the top issuers, according to a Bank of America Merrill Lynch index. Brisbane Airport Corp and Airport Motorway Trust, which finances Sydney's Eastern Distributor toll road, were the next best. The gauge as a whole provided a 2.5 per cent gain, compared with 2 per cent for government debt, 1.9 per cent for financials and 4.3 per cent for US industrial bonds.

Investors in Australian debt are clamouring for the extra yield and diversity offered by corporate notes as the government looks to spur construction amid a waning resources boom. Notes linked to regulated monopolistic assets with more predictable cash flows are finding favour as issuance by non-financial companies slowed to a pace unseen in almost two years and muted credit demand capped sales by banks.