Australian Corporate Bonds 28 Sep – 2 Oct 2015

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In what can only be described as a very quiet week for corporate issuance, Federation Centres went about finalising a three tranche issue of unsecured notes via a US private placement. There were two USD tranches totalling $250m and one 15y AUD tranche worth $75m. The USD tranche maturities were for 10 year and 15 years while the AUD tranche was for 15 years and across the three tranches the weighted average margin was approximately Treasurys + 170bps. Federation has an A- rating from S&P. The only other domestic issue of note was a $750m six tranche issue of RMBS from ING. The Class A tranche made up the bulk of the issue and it was priced about 15bps higher than the comparable tranche in June 2014.

The move towards sovereigns and other ultra-safe debt was seen in the Kangaroo market with International Finance Corporation’s issue of $25m April 2025s sold at ACGB + 46.5bps, 2.5bps less than the last one in mid-September and Landeskreditbank Baden-Wuerttemberg-Foerderbank $50m issue of August 2025s sold at ACGB + 63.5bps, 8bps less than the last issue in early August.

A UK analyst from Investec wrote a report last week saying Glencore could be worthless (see Glencore’s debt woes). Glencore shares were smashed 30% in one day, some of their bonds hit yields of over 13% and their credit default swap prices soared. Glenore’s Australian bonds were hit in the subsequent turmoil as the company struggled to fend off the comments.

The new iTraxx Series 24 finished the week at 136.5 up from 131.5. The index reached a peak at 141.7 early in the week as the Volkwagen debacle tainted the whole of the corporate sector, before easing off as the week wore on. The increase continues the recent trend which began in early March.

Moody’s has upgraded Wyuna Water Pty Limited’s senior secured ratings to A2 (outlook stable) from A3. Wyuna is a special-purpose vehicle which has a contract with Sydney Water Corporation to build and operate two water filtration plants in Sydney. Wyuna is owned by Veolia Water (30%) and Industry Funds Management (70%) and has some bonds trading in the domestic market such as its 2022 indexed annuity bond. Recently the agreement with Sydney Water was extended by fifteen years and the upgrade is the result of the rating agency’s view of a likely increase in revenue and earnings for Wyuna.

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10052015 Corp Bonds Spread to ACGB Apr 2020 Weekly

10052015 iTRAXX Australia Weekly[/private]

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AUST CORPORATE BONDS

ISSUERMATURITYCOUPON (%)RATINGWEEK
HIGH
WEEK
LOW
CLOSING
YIELD
Δ WEEKΔ MONTH
ANZ9-May-166.75AA-2.392.342.36-0.030.02
Westpac9-May-166.75AA-2.372.332.34-0.030.00
Transurban8-Jun-166.75A-3.213.163.18-0.020.02
Stockland1-Jul-167.5A-3.012.952.95-0.050.01
Fonterra11-Jul-166.25A+2.772.722.73-0.040.00
Telstra2-Aug-167A2.522.492.49-0.020.02
Melb Airport25-Aug-167A-2.972.902.92-0.05-0.04
Mirvac Finance16-Sep-168BBB+3.123.063.07-0.04-0.01
Wesfarmers4-Nov-166A-2.722.672.68-0.040.04
Westpac18-Nov-167.25AA-2.412.362.37-0.04-0.05
Suncorp (CB)6-Dec-164.75n/a2.522.482.48-0.04-0.04
CBA (CB)25-Jan-175.75n/a2.402.352.36-0.04-0.03
Aust Post6-Feb-175.5AA2.702.642.65-0.05-0.07
Westpac (CB)6-Feb-175.75n/a2.402.342.34-0.05-0.06
NAB15-Feb-176AA-2.492.432.43-0.04-0.02
Westpac20-Feb-176AA-2.482.432.43-0.040.00
Crown18-Jul-175.75BBB3.393.323.35-0.04-0.08
BP Cap5-Sep-174.5A3.022.962.97-0.05-0.02
BHP18-Oct-173.75A+3.123.033.120.070.20
Telstra15-Nov-174A2.792.742.75-0.030.03
HSBC16-Nov-174.25AA-2.742.692.71-0.04-0.05
Westpac24-Jan-184.25AA-2.662.602.62-0.04-0.01
CBA25-Jan-184.25AA-2.662.612.63-0.03-0.01
NAB7-Mar-187.25AA-2.672.602.62-0.05-0.02
ANZ17-Apr-184.25AA-2.742.672.70-0.050.01
NAB23-May-184AA-2.742.682.70-0.04-0.01
Syd Airport6-Jul-187.75BBB3.293.213.23-0.05-0.10
ANZ6-Nov-184.5AA-2.852.782.81-0.040.02
Lendlease13-Nov-185.5BBB-4.003.913.98-0.020.08
Telstra13-Nov-184.5A3.012.932.96-0.050.11
Westpac25-Feb-194.5AA-2.892.832.87-0.010.01
Woolworths21-Mar-196A-3.593.513.56-0.020.19
Wesfarmers28-Mar-196.25A-3.153.093.140.000.03
CBA24-Apr-194.25AA-2.962.872.92-0.030.01
Bris Airport9-Jul-198BBB3.433.343.38-0.04-0.09
Apple Inc28-Aug-192.85AA+2.922.842.89-0.032.89
Stockland6-Sep-195.5A-3.543.463.51-0.03-0.06
DBNGP11-Oct-196BBB-4.023.953.99-0.03-0.09
Westfield Retail23-Oct-195A3.583.493.54-0.04-0.01
CFS Retail19-Dec-195A3.333.253.29-0.04-0.11
CBA5-Feb-207.25AA-3.173.063.11-0.030.01
Westpac11-Feb-207.25AA-3.173.063.11-0.050.01
Wesfarmers12-Mar-204.75A-3.403.313.37-0.030.04
Qantas27-Apr-206.5BB+5.304.945.030.090.00
Lendlease13-May-206BBB-4.354.234.350.030.14
Melb Airport4-Jun-205A-3.493.403.44-0.05-0.08
Telstra15-Jul-207.75A3.333.273.31-0.020.11
Perth Airport23-Jul-206BBB3.753.663.70-0.05-0.05
Mirvac Fin18-Sep-205.75BBB+3.743.663.74-0.01-0.07
Bris Airport21-Oct-206BBB3.723.643.68-0.05-0.10
Aust Post13-Nov-205AA3.193.123.16-0.02-0.09
Stockland25-Nov-208.25A-3.723.653.68-0.04-0.12
Uni Sydney16-Apr-214.75n/a3.103.013.05-0.06-0.07
Apple Inc28-Aug-223.7AA+3.763.703.70-0.093.70
Telstra16-Sep-224A3.963.863.90-0.063.90
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