09 Nov – 13 Nov 2015

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Corporate bond yields generally rose between 15bps and 18bps whereas corresponding Commonwealth bonds rose 18bps. Previously, YieldReport had commented on spread contraction as a theme of recent weeks and this week the theme continued, with corporate spreads falling by 1-4bps. The iTraxx Australian CDS index reversed its recent trend, finishing the week at 119.8, up from the previous 114.6.

itraxx-13nov
It was another busy week for issuance from Australian corporate offshore and onshore.

The biggest deal of the week was a USD$3.25 billion four tranche fixed and floating deal from ANZ, which sold the bonds into the US market. It comprised two 3 year tranches of USD$750 million, one fixed, the other floating at Treasurys + 80bps and Libor + 75bps respectively, another $750 million tranche of 10 year fixed rate bonds at Treasurys + 140bps and a USD$1 billion 5 year fixed tranche at Treasurys + 100bps.

QBE also sold into the US market, by issuing USD$300 million of 30 year (No call for 10 years) fixed rate bonds

corporatebonds-13nov

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National Australia Bank went into the European market instead and issued €1 billion worth of bonds in two tranches; €750m 7 year covered bonds at Swap + 32bps and €250 million 4 year floating rate bonds at BBSW + 116bps.

Back in late October YieldReport flagged a series of investor meetings by Suncorp’s insurance subsidiary AAI Ltd. Those investor meetings resulted in the issue of a new 25-year (non-call five), tier 2 bond fixed rate transaction at BBSW + 330bps.

Stockland Trust Management issued $250 million 7 year fixed rate bonds at Swap + 190bps, Sunland Group issued $40 million 5 year fixed rate bonds at 7.55%, Auswide Bank, formerly the Wide Bay Building Society issued $25 million 1 year floating rate notes at BBSW +70bps and Mercedes-Benz Australia issued $100 million 3 year fixed rate bonds.

Australian Unity is in the process of issuing 5 year fixed rate bonds which will be listed on the ASX in what will the first example of bonds issued under the new “simple corporate bonds” legislation.

Firstmac sold $690 million worth of RMBS via multiple tranches with the largest tranche worth $400 million and Bankwest refinanced its Swan 2010-2 Class A3 notes by issuing the $190 million of Class A3-R notes.

Fortescue has been buying back debt this year and announced a tender for the purchase of some of its 2019 and 2022 bonds. While Fortescue may not be making as much profit from mining as the company would like, it seems to be doing well from its bond trading operation, with the latest tender offering to buy back bonds at a discount to face value.

There was just the one deal in the Kangaroo space this week. The Province of Quebec, rated A+ by S & P, returned after a six month absence and issued a new series of May 2026 to the tune of $50 million at ACGB + 76bps. The bond sale comes just under a week after the last Canadian province (Ontario) made a foray into the Kangaroo market.

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AUST CORPORATE BONDS

ISSUERMATURITYCOUPON (%)RATINGWEEK
HIGH
WEEK
LOW
CLOSING
YIELD
Δ WEEKΔ MONTH
ANZ9-May-166.75AA-2.482.432.480.070.13
Westpac9-May-166.75AA-2.472.422.470.070.13
Transurban8-Jun-166.75A-3.293.253.290.040.11
Stockland1-Jul-167.50A-3.103.043.090.080.14
Fonterra11-Jul-166.25A+2.892.822.890.090.17
Telstra2-Aug-167.00A2.642.562.640.100.14
Melb Airport25-Aug-167.00A-3.082.993.080.120.16
Mirvac Finance16-Sep-168.00BBB+3.273.183.270.120.19
Wesfarmers4-Nov-166.00A-2.892.782.890.140.21
Westpac18-Nov-167.25AA-2.552.472.550.110.18
Suncorp (CB)6-Dec-164.75n/a2.722.632.720.130.24
CBA (CB)25-Jan-175.75n/a2.582.492.580.140.22
Aust Post6-Feb-175.50AA2.842.752.840.130.20
Westpac (CB)6-Feb-175.75n/a2.572.482.570.130.23
NAB15-Feb-176.00AA-2.622.532.620.130.19
Westpac20-Feb-176.00AA-2.622.532.620.130.19
Crown18-Jul-175.75BBB3.593.483.590.170.24
BP Cap5-Sep-174.50A3.163.063.160.160.19
BHP18-Oct-173.75A+3.363.263.360.170.24
Telstra15-Nov-174.00A2.962.862.960.160.21
HSBC16-Nov-174.25AA-2.912.802.910.140.20
Westpac24-Jan-184.25AA-2.812.702.810.140.19
CBA25-Jan-184.25AA-2.812.702.810.150.18
NAB7-Mar-187.25AA-2.832.722.830.150.20
ANZ17-Apr-184.25AA-2.902.782.900.160.20
NAB23-May-184.00AA-2.902.782.900.140.19
Syd Airport6-Jul-187.75BBB3.423.303.420.150.18
ANZ6-Nov-184.50AA-3.032.903.030.150.21
Lendlease13-Nov-185.50BBB-4.334.214.330.160.35
Telstra13-Nov-184.50A3.143.023.140.160.18
Westpac25-Feb-194.50AA-3.092.973.090.160.22
Woolworths21-Mar-196.00A-3.873.743.870.150.31
Wesfarmers28-Mar-196.25A-3.383.253.380.170.24
CBA24-Apr-194.25AA-3.133.003.130.150.20
Bris Airport9-Jul-198.00BBB3.613.483.610.140.22
Apple Inc28-Aug-192.85AA+2.992.882.990.150.10
Stockland6-Sep-195.50A-3.763.613.760.190.25
DBNGP11-Oct-196.00BBB-4.214.084.210.200.22
Westfield Retail23-Oct-195.00A3.783.633.780.190.24
CFS Retail19-Dec-195.00A3.473.343.470.150.18
CBA5-Feb-207.25AA-3.283.163.280.150.17
Westpac11-Feb-207.25AA-3.313.193.310.160.20
Wesfarmers12-Mar-204.75A-3.603.473.600.180.24
Qantas27-Apr-206.50BB+5.295.165.290.170.26
Lendlease13-May-206.00BBB-4.734.604.730.170.38
Melb Airport4-Jun-205.00A-3.633.513.630.150.20
Telstra15-Jul-207.75A3.523.393.520.160.21
Perth Airport23-Jul-206.00BBB4.033.914.030.190.33
Mirvac Fin18-Sep-205.75BBB+4.073.944.070.200.33
Bris Airport21-Oct-206.00BBB3.943.823.940.150.26
Aust Post13-Nov-205.00AA3.353.233.350.140.19
Stockland25-Nov-208.25A-3.963.823.960.190.28
Uni Sydney16-Apr-214.75n/a3.263.143.260.170.21
Apple Inc28-Aug-223.70AA+3.673.583.670.14-0.03
Telstra16-Sep-224.004.013.894.010.160.11
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