18 Jul – 22 Jul 2016

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Corporate spreads tightened again in a repeat of the tightening we saw in the semis and corporate segments of the market last week, except this time Commonwealth bond yields fell instead of rising as they had done last week. This measure of risk was out of step with another measure, the iTraxx Series 25 index, but after credit default swap prices had plummeted the week before among talk of some investors exiting Brexit-related positions, a little bounce hasn’t surprised traders too much as a sense of normality returns to demand and supply.
itraxx-22jul16

Corporate debt issuance was up a bit this week and dominated by the major banks, although there were one or two other transactions which do not come along all that frequently. Perhaps the most interesting one belongs to ASX-listed TFS Corporation with its issue worth USD$250 million (AUD$334 million). TFS is unrated but it still managed to go offshore and raise debt capital, even if it was at 8.75%.

Floating rate notes were in favour and four out of the five lines which the banks’ sold were in the form of FRNs. CBA issued $500 million 1 year notes at 3m BBSW + 43bps, then issued covered FRNS out to 10 years that were worth €1.25 billion (AUD$1.838 billion) and issued at Swap + 20bps. Westpac also issued FRNs but they were plain FRNs to June 2021 and worth $300 million. Pricing was

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3m BBSW + 114bps. ANZ (New Zealand branch) went to the US market to issued USD$1 billion (AUD$1.335 billion) worth of July 2021 bonds comprising one floating tranche worth USD$750 million at Treasurys + 105bps and a fixed rate tranche for the balance at US Libor + 101bps. While not a major bank, Newcastle Permanent also got into the FRN act, as it has done so regularly in the past. This time it issued $110 million of 2020 FRNs at 3m BBSW + 158bps which compares well with 160bps on a four year deal done in March.

Columbus Capital’s Triton series of RMBS returned after a two year absence. $350 million over eight tranches with pricing ranged from 1m BBSW + 72.5bps for the class A1-a tranche to 1m BBSW + 600bps on the class D tranche.

In the Kangaroo market Wells Fargo was busy. The US bank stated with a two tranche July 2021 deal worth $1.4 billion and then a day later came out with July 2026 deal worth $250 million. The July 2021 comprised a $900 million floating tranche at BBSW + 90bps and a fixed tranche for the balance at Swap + 132bps. The July 2026s were done at Swap + 170bps.

Asian Development Bank issued  $100 million July 2026s at ACGB + 57.5bps while Toyota Motor Credit sold $400 million at Swap + 100bps.

All these and other bond issues can be found via the link below.

Click here for new debt issues

AUS CORPORATE BONDS

ISSUERMATURITYCOUPON (%)RATINGWEEK
HIGH
WEEK
LOW
CLOSING
YIELD
Δ WEEKΔ MONTH
Telstra2-Aug-167.00A2.202.192.19-0.02-0.10
Melb Airport25-Aug-167.00A-2.522.492.49-0.03-0.20
Mirvac Finance16-Sep-168.00BBB+2.662.622.62-0.05-0.31
Wesfarmers4-Nov-166.00A-2.642.562.56-0.05-0.11
Westpac18-Nov-167.25AA-2.132.092.09-0.04-0.11
Suncorp (CB)6-Dec-164.75n/a2.282.252.25-0.04-0.14
CBA (CB)25-Jan-175.75n/a2.152.102.10-0.05-0.11
Aust Post6-Feb-175.50AA2.532.492.49-0.05-0.09
Westpac (CB)6-Feb-175.75n/a2.152.102.10-0.06-0.11
NAB15-Feb-176.00AA-2.172.132.13-0.05-0.08
Westpac20-Feb-176.00AA-2.192.122.12-0.08-0.11
Crown18-Jul-175.75BBB3.113.013.01-0.06-0.31
BP Cap5-Sep-174.50A2.782.722.72-0.07-0.06
BHP18-Oct-173.75A+2.892.752.75-0.09-0.22
Telstra15-Nov-174.00A2.582.462.46-0.08-0.16
HSBC16-Nov-174.25AA-2.542.492.49-0.06-0.08
Westpac24-Jan-184.25AA-2.362.302.30-0.07-0.08
CBA25-Jan-184.25AA-2.362.302.30-0.07-0.08
NAB7-Mar-187.25AA-2.342.292.29-0.06-0.08
ANZ17-Apr-184.25AA-2.402.332.33-0.09-0.09
NAB23-May-184.00AA-2.392.342.34-0.06-0.08
Syd Airport6-Jul-187.75BBB2.942.892.89-0.06-0.06
ANZ6-Nov-184.50AA-2.512.452.45-0.08-0.09
Lendlease13-Nov-185.50BBB-3.553.383.38-0.11-0.33
Telstra13-Nov-184.50A2.682.602.60-0.07-0.11
Westpac25-Feb-194.50AA-2.552.492.50-0.07-0.08
Woolworths21-Mar-196.00A-3.373.263.26-0.10-0.18
Wesfarmers28-Mar-196.25A-2.962.862.86-0.08-0.15
CBA24-Apr-194.25AA-2.602.542.54-0.07-0.06
Bris Airport9-Jul-198.00BBB3.213.143.14-0.07-0.08
Apple Inc28-Aug-192.85AA+2.452.392.39-0.07-0.14
Stockland6-Sep-195.50A-3.162.972.97-0.10-0.28
DBNGP11-Oct-196.00BBB-3.783.723.72-0.07-0.05
Westfield Retail23-Oct-195.00A2.942.872.88-0.07-0.09
CBA5-Feb-207.25AA-2.692.622.62-0.08-0.09
Westpac11-Feb-207.25AA-2.692.622.62-0.08-0.09
Wesfarmers12-Mar-204.75A-3.163.063.06-0.07-0.13
Qantas27-Apr-206.50BB+4.174.084.08-0.11-0.10
Lendlease13-May-206.00BBB-4.133.923.92-0.14-0.38
Melb Airport4-Jun-205.00A-2.992.922.92-0.07-0.14
Telstra15-Jul-207.75A2.842.732.73-0.08-0.16
Perth Airport23-Jul-206.00BBB3.563.503.51-0.06-0.07
Mirvac Fin18-Sep-205.75BBB+3.563.403.40-0.09-0.27
Bris Airport21-Oct-206.00BBB3.453.373.37-0.06-0.14
Aust Post13-Nov-205.00AA2.752.692.70-0.06-0.07
Stockland25-Nov-208.25A-3.233.123.13-0.11-0.23
Uni Sydney16-Apr-214.75Aa12.572.482.48-0.07-0.13
Apple Inc28-Aug-223.70AA+2.872.782.78-0.08-0.13
Melb Airport15-Sep-224.00A-3.313.253.25-0.06-0.23
Telstra16-Sep-224.00A3.062.952.95-0.08-0.18
CBA (AU)27-May-244.75AA-2.852.68
Wells Fargo & Co.27-Aug-244.75A+3.413.343.400.00-0.11
Uni Sydney28-Aug-253.75Aa12.972.902.90-0.06-0.19