Australian Corporate Bonds October 2015

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Corporate bond spreads began the month widening but began to recover mid-month. Average AAA rated bonds widened around 3bps, AA around 12bps while A rated bond spreads on average fell around 9bps. The corporate bond index for October returned 0.307%.

October was a strong month for debt issuance with the highlight being BHP’s whopper 5 tranche issue worth over $8.8 billion. There were two tranches worth US$3.25 billion, two tranches worth €2 billion euros and one of ₤600 million. It was done not long after resource companies in particular had seen the cost of credit default swaps (debt insurance) blow out in September amid global growth concerns and the creditworthiness of Glencore. The high quality, bumper issue saw investors scramble to invest and total bids topped $19billion.

100115 Corp Bonds Spread to ACGB Apr 2020

Domestic banks were active issuers in October. Commonwealth started off the month with a $2 billion 3 year FRN, followed by ₤300m 3 year FRN mid-month and ended the month with a three tranche fixed and floating deal worth US$2.25 billion. Shortly after Commonwealth’s USD issue, National Australia Bank issued $2.1 billion of 5 year FRNs and both Westpac and Suncorp-Metway Bank each issued dual tranche fixed and floating deals of $2.275 billion and $750m respectively just after the middle of the month.

Transurban Group entered the US 144A market for the first time to issue US$550m fixed 10 year bonds, with most of the funds raised being used to repay existing US denominated debt which was due in 2017.

On the asset-backed securities front, ING started the month with six tranches of RMBS worth almost $750 million, Macquarie Leasing issued asset back securities worth US$476.3m offshore and then Pepper issued 9 tranches worth $300 million.

Swedbank made its inaugural Kangaroo issue with a dual tranches fixed and floating deal, the majority of funds raised in the floating tranche and Auckland Council returned to a tap to the March 2026s after making its debut in early September. Groupe BPCE returned after a six month absence to issue October 2025 (callable in 5 years) while International Finance Corporation tapped its October 2025 line twice, the second tap 3bps better than the first whereas Inter-American Development Bank second tap for the month did not fare quitter as well, the second tap only 0.75bps less than the first. Regular issuers Rentenbank tapped the May 2026s for $100m and KfW Bankengruppe got $300m of its April 2020s away. Finally, the Province of Manitoba issued $75m of the March 2025s which it previously issued in August,

The iTraxx series 24 index started October at 137 and began trending down. What had been the market’s concern in September regarding deteriorating credit conditions and lower global growth faded. The resource companies which fuelled September’s index increase lead the way for October’s reversal, although the fall in CDS rates were across the board. As a result, the cost of insuring corporate debt as measured by iTraxx consistently fell and finished the month at the low of 117.0.

Refer to our tables below for a complete list of issuers in October.

100115 iTraxx Australia

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AUSTRALIAN CORPORATE BONDS

ISSUERMATURITYCOUPON
(%)
RATINGISSUE
SIZE ($m)
MONTH
HIGH
MONTH
LOW
CLOSING
YIELD
Δ MONTHΔ 2 MONTH
ANZ9-May-166.75AA-7752.392.272.31-0.040.04
WESTPAC9-May-166.75AA-6252.382.262.30-0.030.03
TRANSURBAN8-Jun-166.75A-2003.203.103.13-0.04-0.02
STOCKLAND1-Jul-167.5A-02.982.842.88-0.080.01
FONTERRA11-Jul-166.25A+02.742.632.67-0.050.02
TELSTRA2-Aug-167A02.502.362.40-0.090.02
MLBAIRPORT25-Aug-167A-02.942.792.83-0.09-0.04
MIRVAC FIN16-Sep-168BBB+03.102.983.02-0.060.05
WESFARMERS4-Nov-166A-5002.702.592.63-0.040.08
WESTPAC18-Nov-167.25AA-16952.392.272.31-0.060.01
CB SUNCORP6-Dec-164.75N/A11002.542.402.45-0.030.04
CB CBA25-Jan-175.75N/A20002.392.272.31-0.050.03
AUSTPOST6-Feb-175.5AA02.672.562.60-0.05-0.02
CB WESTPAC6-Feb-175.75N/A17002.372.272.32-0.030.04
NAB15-Feb-176AA-13002.452.342.38-0.050.03
WESTPAC20-Feb-176AA-7252.452.332.37-0.060.02
CROWN18-Jul-175.75BBB3003.383.263.29-0.03-0.02
BPCAP5-Sep-174.5A02.982.862.89-0.060.02
BHP18-Oct-173.75A+10003.163.043.070.040.19
TELSTRA15-Nov-174A7502.782.662.70-0.040.08
HSBC16-Nov-174.25AA-2502.742.612.65-0.050.01
WESTPAC24-Jan-184.25AA-2502.632.512.55-0.050.01
CBA25-Jan-184.25AA-7502.642.512.56-0.050.01
NAB7-Mar-187.25AA-7002.642.512.54-0.06-0.02
ANZ17-Apr-184.25AA-2502.702.602.63-0.050.02
NAB23-May-184AA-3252.722.602.63-0.050.01
SYDAIRPORT6-Jul-187.75BBB03.263.123.14-0.06-0.06
ANZ6-Nov-184.5AA-3002.842.722.75-0.030.06
LENDLEASE13-Nov-185.5BBB-2504.103.984.020.110.22
TELSTRA13-Nov-184.5A5002.992.862.88-0.050.10
WESTPAC25-Feb-194.5AA-11002.892.792.81-0.020.06
WOOLWORTHS21-Mar-196A-5003.613.473.520.000.13
WESFARMERS28-Mar-196.25A-5003.183.073.100.010.11
CBA24-Apr-194.25AA-5002.952.812.85-0.040.05
BRISAIR9-Jul-198BBB2003.433.313.33-0.01-0.01
APPLE28-Aug-192.85AA+4002.922.692.70-0.142.70
STOCKLAND6-Sep-195.5A-1503.553.413.44-0.02-0.01
DBNGP11-Oct-196BBB-04.023.873.89-0.06-0.04
WESTF RET23-Oct-195A03.603.443.46-0.020.02
CFS RETAIL19-Dec-195A03.343.183.21-0.05-0.06
CBA5-Feb-207.25AA-2503.133.013.03-0.040.05
WESTPAC11-Feb-207.25AA-3903.133.003.03-0.040.03
WESFARMERS12-Mar-204.75A-3503.413.283.30-0.010.07
QANTAS27-Apr-206.5BB+2505.084.964.990.000.21
LENDLEASE13-May-206BBB-2254.504.334.430.200.27
MLBAIRPORT4-Jun-205A-2253.493.333.35-0.05-0.03
TELSTRA15-Jul-207.75A5003.353.193.21-0.060.10
PERAIR23-Jul-206BBB03.793.673.720.060.08
MIRVAC FIN18-Sep-205.75BBB+2003.783.653.680.020.02
BRISAIR21-Oct-206BBB3503.763.643.660.020.02
AUSTPOST13-Nov-205AA03.233.073.10-0.03-0.03
STOCKLAND25-Nov-208.25A-1603.753.603.650.00-0.02
UNISYD16-Apr-214.75N/A2003.092.942.96-0.05-0.09
APPLE28-Aug-223.7AA+11503.723.403.42-0.303.42
TLSAU19-Sep-224A5003.843.713.73-0.08-0.14
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