16 May – 20 May 2016

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Corporate spreads have generally been tightening in recent times and it has been part of a wider theme. As ACGBs hit all-time lows, investor focus has turned to other forms of debt which offer a higher yields. Naturally, semi-government debt is the first to be considered, but by the look of corporate spreads, investor attention is spilling into the corporate bond arena. Other measures of corporate risk, such as credit default prices, have also been trending down in recent weeks and months as well. Credit default swap prices for Australian corporates were lower for the second week in a row and the iTraxx Series 25 index edged lower to finish at 132.0, down from the previous week’s close of 134.90 and well away from the 170 levels seen in February.

itraxx-yield-20may

Which is why maybe there have been a plethora of bond issues recently and noticeably from some non-bank corporates. ANZ thinks these corporates have timed it well as bond markets have only just re-acquainted themselves with the concept of rising official US rates this year. Higher US official rates usually translates in higher rates along the curve in the US and therefore higher rates along the curve in most other advanced economies.

The larger issues were from household names. QBE Insurance Group went to the UK market with a £325 million (AUD$650 million) bond sale of May 2042s, Lend Lease Finance went to the US market and sold USD$400 million (AUD$400 million) of May 2026s while AMP stayed home and issued $500 million (AUD$500 million) of bonds, also May 2026s.

Commonwealth Bank issued a couple of yen-denominated bonds but they were quite small by CBA standards; one was worth ¥5.286 billion (AUD$66.5 million) and the other worth ¥13.322 billion (AUD$167.7 million). The bank also managed a euro-denominated deal worth €40 million (AUD$62.5 million).

National Australia Bank issued $300 million worth of 1 year notes which you won’t often see from the major banks.

ICBC (Sydney) was the only issuer to sell floating rate bonds this week, issuing $400 million May 2019 FRNs, but it has a history of doing this so it not so unusual.

In the Kangaroo market only $170 million worth of bonds were issued, which is a fraction of the $1.07 billion issued in the previous week. Auckland Council tapped its March 2026 line for $60 million, while Nederlandse Waterschapsbank tapped its September 2026 line three times for a total of $60 million. The other sale in this segment of the bond market came from an issuer not seen often in Australian market. KommuneKredit last issued 10 year zero coupon bonds in 2013 and this week it emerged to issue $50 million November 2026s, this time with a 2.90% coupon.

There were also a few other bond and RMBS sales which readers can find in the link (“new debt issues”) below.

corporate-yield-20may

Click here for new debt issues
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AUS CORPORATE BONDS

ISSUERMATURITYCOUPON (%)RATINGWEEK
HIGH
WEEK
LOW
CLOSING
YIELD
Δ WEEKΔ MONTH
Stockland1-Jul-167.50A-2.672.652.65-0.01-0.37
Fonterra11-Jul-166.25A+2.592.502.50-0.05-0.41
Telstra2-Aug-167.00A2.412.392.390.00-0.31
Melb Airport25-Aug-167.00A-2.792.722.780.02-0.29
Mirvac Finance16-Sep-168.00BBB+3.012.962.960.02-0.34
Wesfarmers4-Nov-166.00A-2.682.632.670.02-0.29
Westpac18-Nov-167.25AA-2.272.242.240.01-0.35
Suncorp (CB)6-Dec-164.75n/a2.462.432.440.03-0.34
CBA (CB)25-Jan-175.75n/a2.282.252.270.02-0.35
Aust Post6-Feb-175.50AA2.582.552.580.03-0.31
Westpac (CB)6-Feb-175.75n/a2.292.252.260.02-0.35
NAB15-Feb-176.00AA-2.282.252.260.01-0.35
Westpac20-Feb-176.00AA-2.292.262.260.01-0.36
Crown18-Jul-175.75BBB3.333.103.330.03-0.58
BP Cap5-Sep-174.50A2.872.792.79-0.04-0.45
BHP18-Oct-173.75A+2.992.962.980.03-0.39
Telstra15-Nov-174.00A2.632.572.620.03-0.38
HSBC16-Nov-174.25AA-2.622.562.610.04-0.37
Westpac24-Jan-184.25AA-2.432.392.410.04-0.38
CBA25-Jan-184.25AA-2.412.372.400.04-0.38
NAB7-Mar-187.25AA-2.432.392.420.03-0.35
ANZ17-Apr-184.25AA-2.472.402.460.03-0.34
NAB23-May-184.00AA-2.482.412.470.03-0.35
Syd Airport6-Jul-187.75BBB3.042.983.030.04-0.36
ANZ6-Nov-184.50AA-2.592.532.580.04-0.38
Lendlease13-Nov-185.50BBB-3.763.673.750.04-0.65
Telstra13-Nov-184.50A2.762.682.750.04-0.33
Westpac25-Feb-194.50AA-2.652.602.630.03-0.40
Woolworths21-Mar-196.00A-3.483.393.480.04-0.24
Wesfarmers28-Mar-196.25A-3.052.963.050.05-0.37
CBA24-Apr-194.25AA-2.672.612.670.04-0.38
Bris Airport9-Jul-198.00BBB3.293.163.290.05-0.29
Apple Inc28-Aug-192.85AA+2.542.462.530.05-0.39
Stockland6-Sep-195.50A-3.313.213.300.05-0.36
DBNGP11-Oct-196.00BBB-3.843.783.830.05-0.34
Westfield Retail23-Oct-195.00A3.052.993.020.03-0.46
CBA5-Feb-207.25AA-2.802.742.800.05-0.36
Westpac11-Feb-207.25AA-2.812.752.800.05-0.37
Wesfarmers12-Mar-204.75A-3.273.173.260.05-0.37
Qantas27-Apr-206.50BB+4.264.154.250.07-0.35
Lendlease13-May-206.00BBB-4.394.334.380.02-0.41
Melb Airport4-Jun-205.00A-3.153.073.140.05-0.34
Telstra15-Jul-207.75A2.972.872.960.05-0.33
Perth Airport23-Jul-206.00BBB3.683.593.670.06-0.35
Mirvac Fin18-Sep-205.75BBB+3.763.643.750.06-0.32
Bris Airport21-Oct-206.00BBB3.623.463.610.06-0.26
Aust Post13-Nov-205.00AA2.862.782.850.06-0.33
Stockland25-Nov-208.25A-3.453.373.440.06-0.36
Uni Sydney16-Apr-214.75Aa12.742.662.730.05-0.33
Apple Inc28-Aug-223.70AA+3.012.872.990.05-0.33
Melb Airport15-Sep-224.00A-3.633.453.610.06-0.23
Telstra16-Sep-224.00A3.273.153.250.05-0.30
CBA (AU)27-May-244.75AA-2.962.782.960.06-0.27
NAB25-Jun-245.00AA-3.333.263.33-0.02-0.31
Wells Fargo & Co.27-Aug-244.75A+3.743.573.720.05-0.23
Uni Sydney28-Aug-253.75Aa13.353.223.330.05-0.27
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