August 2016

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Semi-government spreads rose over the month but only because Treasury Corp (NSW) spreads widened in the wake of the Federal Treasurer’s blocking of both foreign bidders for the AusGrid state electricity assets. Excluding Treasury Corp securities, semi-government yields followed their Commonwealth counterparts, despite Moody’s downgrade of Tasmania’s credit rating from Aa2 to Aa1. However, the RBA’s purchase of $100 million worth of various semi-government bonds not only added extra buying pressure in the semis market, it also sent a signal to participants of the views of the most-powerful domestic player.

A noticeable widening between ten year bonds issued by Queensland and Western Australia bonds has emerged and it appears as if the widening trend became pronounced in March/April. However, it could be argued the divergence began around the beginning of 2015 when the WATC/QTC 2025 spread was about zero.

State financing authorities issuance is quite often a bit thin on the ground but during August, QTC, SAFA and Treasury Corp (NSW) all issued bonds. QTC kicked things off with the issue of $500 million worth of July 2026s and SAFA then followed with the sale of $1 billion worth of September 2022s. SAFA’s use of an unusually low 1.5% coupon somewhat perplexed the market and, other than investor preference, a reason for the low coupon has not yet emerged. Towards the end of the month TCorp issued $102 million worth of November 2035 ILBs as part of its $502 million buyback of November 2020s.Aug 16 Semi bonds

AUST SEMI GOVT BONDS

ISSUERMATURITYCOUPON
(%)
ISSUE SIZEMONTH
HIGH
MONTH
LOW
CLOSING
YIELD
Δ MONTHΔ 2 MONTH
TCV15-Nov-165.7530821.691.671.68-0.09-0.12
NTTC20-Nov-165.755001.821.751.80-0.06-0.14
NSWTC20-Feb-174.0036571.711.601.710.00-0.02
NSWTC1-Mar-175.506711.641.541.640.00-0.01
WATC15-Jul-178.0054471.671.601.65-0.05-0.11
QTC14-Sep-176.0010011.581.501.56-0.05-0.11
SAFA20-Sep-175.7520501.641.571.63-0.06-0.12
TASCORP20-Sep-175.009681.681.611.67-0.04-0.12
QTC21-Sep-173.5043611.651.571.63-0.05-0.11
NTTC17-Nov-174.755001.711.631.69-0.05-0.11
TCV17-Nov-173.5030051.641.561.62-0.05-0.12
NSWTC1-Feb-186.0045421.601.531.58-0.03-0.10
QTC21-Feb-186.0055621.651.571.63-0.02-0.10
ACTTREAS7-Jun-185.505501.701.611.66-0.06-0.14
NTTC20-Sep-184.755001.761.691.74-0.03-0.13
WATC23-Oct-183.7553851.751.671.71-0.04-0.15
TCV15-Nov-185.5039921.631.561.59-0.07-0.14
NSWTC20-Mar-193.5042651.621.531.59-0.02-0.12
NSWTC1-Apr-196.005291.541.441.51-0.02-0.12
QTC14-Jun-196.2530251.571.491.54-0.04-0.16
QTC21-Jun-194.0057971.701.621.67-0.04-0.16
SAFA6-Aug-194.7520001.731.651.69-0.05-0.16
WATC15-Oct-197.0044701.801.731.77-0.04-0.16
QTC21-Feb-206.2596861.761.671.73-0.03-0.15
NSWTC1-May-206.0062901.661.561.62-0.02-0.13
ACTTREAS22-May-204.255701.751.641.70-0.08-0.18
NSWTC1-Jun-206.001001.571.471.51-0.04-0.14
TASCORP15-Jun-206.006571.811.731.77-0.04-0.15
TCV15-Jun-206.0060961.671.581.63-0.04-0.14
NSWTC8-Apr-214.0035101.751.641.71-0.01-0.10
SAFA20-May-215.0020441.911.821.86-0.04-0.15
QTC14-Jun-216.0014251.741.641.68-0.04-0.13
QTC21-Jun-215.5070951.891.801.83-0.04-0.14
WATC15-Jul-217.0032202.001.911.96-0.03-0.12
NTTC20-Sep-214.256501.981.881.93-0.03-0.14
NSWTC1-Mar-226.0057541.821.711.76-0.03-0.11
TASCORP8-Mar-224.257632.011.901.980.00-0.11
ACTTREAS11-Apr-224.255501.951.841.90-0.02-0.13
QTC21-Jul-226.0082082.021.921.95-0.05-0.15
TCV17-Oct-226.0061421.861.761.79-0.05-0.16
NSWTC20-Apr-234.0042951.961.831.86-0.03-0.14
NSWTC1-May-236.009591.831.711.74-0.04-0.14
QTC21-Jul-234.2578932.172.062.07-0.06-0.15
WATC16-Oct-236.0033422.322.202.22-0.05-0.15
SAFA20-Nov-234.2515202.202.082.11-0.04-0.17
NTTC15-Mar-246.006502.262.132.15-0.04-0.17
TASCORP11-Jun-244.007322.252.122.15-0.03-0.16
QTC22-Jul-245.7579662.262.142.14-0.06-0.18
NSWTC20-Aug-245.0063242.051.921.94-0.04-0.15
TCV17-Dec-245.5050502.061.941.95-0.05-0.17
SAFA16-Apr-252.7512502.402.272.27-0.06-0.19
QTC21-Jul-254.7564342.372.232.23-0.08-0.17
WATC23-Jul-255.0034042.522.392.40-0.05-0.14
TASCORP19-Feb-263.255902.472.332.34-0.05-0.16
NTTC15-Mar-266.006502.422.282.29-0.05-0.16
QTC21-Jul-263.2546002.482.312.31-0.09-0.18
TCV17-Nov-265.5038622.212.082.08-0.06-0.16
WATC21-Oct-273.009432.752.612.63-0.03-0.14
QTC21-Jul-283.2510002.662.512.51-0.05-0.14
NSWTC1-May-306.003632.412.272.32-0.01-0.14
TCV20-Dec-324.253532.662.502.540.00-0.14
QTC14-Mar-336.5012102.872.702.75-0.01-0.17
Issues underlined are guaranteed by the Commonwealth Government