11 Apr – 15 Apr 2016

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This latest week witnessed a reversal of the previous week’s risk-averse approach taken by investors globally. Corporate spreads reversed the previous week’s direction and generally narrowed. Australian credit default swap prices fell over the week and the iTraxx Series 25 index fell to 134.7, down from 140.6. The value of primary market sales of bond and asset-backed securities rose substantially compared to the previous week, with $4billion worth of issues compared to the previous week $2.5billion and the emphasis was once again on floating rate instruments.

itraxx-15apr-yieldreport

Part of the reason for the larger amount of issuance was dues to CBA’s efforts. CBA issued $2billion worth of June 2019 FRNs at 3m BBSW + 98bps as well as £250million (AUD$470 million) 2017 FRNs at 3month Libor + 26bps. There was also nearly $300 million of fixed rate 2017 and 2019 bonds issued by CBA as well.

NAB and Bendigo & Adelaide Bank were also keen on the floating rate notes. Bendigo & Adelaide Bank issued $650million April 2021 FRNs at 3m BBSW + 146bps while NAB issued $100million 2019 FRNs.

Asset backed securities were very much in demand. RESIMAC Series 2016-1 Trust issued nearly $500 million worth of units in seven tranches of residential mortgage-backed securities early in the week. Then Westpac finished the week by increasing a planned $500 million sale of securities backed by car loans to $1.3 billion, which is believed to be the largest asset backed deal since the GFC.

In the Kangaroo market, the larger bond sales came from World Bank subsidiary International Bank Reconstruction & Development which made two issues; one for $550million January 2021s at ACGB + 56.75bps and the other for $150million October 2026s at ACGB + 58bps. Canadian Imperial Bank of Commerce also had a substantial line of bonds to issue, selling $400million worth of 5 year floating rate covered bonds at 3m BBSW + 110bps. Among the smaller sales, Corporación Andina de Fomento came back after a brief absence to issue $80million September 2026s, Landeskreditbank issued $70million August 2026s. Royal Bank of Canada came to market twice with April 2021s, once for $47million and then later in the week for $35 million.

corporate-15apr-yieldreport
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AUS CORPORATE BONDS

ISSUERMATURITYCOUPON (%)RATINGWEEK
HIGH
WEEK
LOW
CLOSING
YIELD
Δ WEEKΔ MONTH
Stockland1-Jul-167.50A-3.063.023.02-0.03-0.15
Fonterra11-Jul-166.25A+2.922.892.910.03-0.05
Telstra2-Aug-167.00A2.702.662.700.04-0.06
Melb Airport25-Aug-167.00A-3.073.023.070.05-0.11
Mirvac Finance16-Sep-168.00BBB+3.313.263.310.04-0.04
Wesfarmers4-Nov-166.00A-2.962.892.960.07-0.02
Westpac18-Nov-167.25AA-2.602.522.590.07-0.06
Suncorp (CB)6-Dec-164.75n/a2.782.702.780.07-0.02
CBA (CB)25-Jan-175.75n/a2.622.542.610.08-0.03
Aust Post6-Feb-175.50AA2.892.802.890.08-0.03
Westpac (CB)6-Feb-175.75n/a2.632.542.620.09-0.03
NAB15-Feb-176.00AA-2.612.522.610.09-0.08
Westpac20-Feb-176.00AA-2.622.532.620.09-0.07
Crown18-Jul-175.75BBB3.903.823.900.080.00
BP Cap5-Sep-174.50A3.253.193.240.04-0.08
BHP18-Oct-173.75A+3.363.303.360.06-0.14
Telstra15-Nov-174.00A3.002.903.000.10-0.02
HSBC16-Nov-174.25AA-2.992.882.990.110.00
Westpac24-Jan-184.25AA-2.802.682.800.11-0.07
CBA25-Jan-184.25AA-2.782.672.780.11-0.09
NAB7-Mar-187.25AA-2.762.682.760.08-0.13
ANZ17-Apr-184.25AA-2.802.692.800.11-0.14
NAB23-May-184.00AA-2.822.702.820.12-0.10
Syd Airport6-Jul-187.75BBB3.393.263.390.12-0.01
ANZ6-Nov-184.50AA-2.962.832.960.13-0.12
Lendlease13-Nov-185.50BBB-4.434.364.410.05-0.11
Telstra13-Nov-184.50A3.092.993.090.09-0.07
Westpac25-Feb-194.50AA-3.032.893.030.13-0.10
Woolworths21-Mar-196.00A-3.743.683.720.03-0.27
Wesfarmers28-Mar-196.25A-3.423.283.420.14-0.05
CBA24-Apr-194.25AA-3.052.913.050.14-0.11
Bris Airport9-Jul-198.00BBB3.583.433.580.140.00
Apple Inc28-Aug-192.85AA+2.932.812.930.10-0.09
Stockland6-Sep-195.50A-3.673.553.670.11-0.06
DBNGP11-Oct-196.00BBB-4.174.034.170.130.00
Westfield Retail23-Oct-195.00A3.483.413.480.06-0.28
CBA5-Feb-207.25AA-3.163.023.160.14-0.08
Westpac11-Feb-207.25AA-3.173.033.170.14-0.09
Wesfarmers12-Mar-204.75A-3.633.503.630.13-0.05
Qantas27-Apr-206.50BB+4.604.464.600.14-0.13
Lendlease13-May-206.00BBB-4.794.654.790.140.02
Melb Airport4-Jun-205.00A-3.493.343.490.14-0.02
Telstra15-Jul-207.75A3.293.183.290.10-0.15
Perth Airport23-Jul-206.00BBB4.023.884.020.14-0.02
Mirvac Fin18-Sep-205.75BBB+4.073.954.070.12-0.05
Bris Airport21-Oct-206.00BBB3.883.733.880.14-0.02
Aust Post13-Nov-205.00AA3.183.043.180.14-0.10
Stockland25-Nov-208.25A-3.803.673.800.13-0.06
Uni Sydney16-Apr-214.75Aa13.062.933.060.14-0.06
Apple Inc28-Aug-223.70AA+3.323.203.320.11-0.20
Melb Airport15-Sep-224.00A-3.843.713.840.14-0.01
Telstra16-Sep-224.00A3.563.433.560.12-0.10
CBA (AU)27-May-244.75AA-3.233.103.230.13-0.10
NAB25-Jun-245.00AA-3.633.503.630.13-0.10
Wells Fargo & Co.27-Aug-244.75A+3.953.873.950.08-0.17
Uni Sydney28-Aug-253.75Aa13.603.463.600.13-0.10
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