2 Nov – 6 Nov 2015

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Corporate bond yields generally rose between 10bps and 15bps whereas corresponding Commonwealth bonds rose 17bps. Consequently spreads contracted on average in what seems to be a theme in the last week or two.

In what was a busy week, Westpac issued fixed rate 5 year covered bonds worth USD$1 billion at Swap + 80bps. As one of Australia’s four major banks, Westpac is a regular issuer into both domestic and offshore markets. It last issued covered bonds into the US market in early July but the most recent issue of covered bonds was into the Eurozone in mid-July.

ANZ issued $600 million tier 2 notes at BBSW + 270bps, a margin seen as being on the generous side and perhaps indicative of a change in attitudes towards bank debt. The transaction also saw yields on similar tier 2 debt move higher. ANZ had a similar tier 2 deal in July 2014 when it issued $750 million worth of 10 year (non-callable for 5 years) bonds at BBSW + 193bps.

Rabobank’s Australian subsidiary issued $100m of fixed rate May 2026s at Swap +135bps. Rabobank last sold bonds into the Australian market back in May when it issued $100 million worth of 5 year fixed bonds, although its offshore sibling sold a dual tranche fixed and floating deal worth $700 million in June.

Oversea-Chinese Banking Corporation (Sydney) returned to the local market to issue $400m floating rate 3 year bonds at BBSW + 86bps, which is 5bps more than the $300m sold in February.

Australia Pacific Airports (Melbourne Airport) sold $120 million worth of 10 year bonds at Swap + 174.75bps, returning to the domestic market for the second time in two months. In September, it issued $250 million of 7 year bonds at Swap + 137bps.

Corporate spreads chart

Click here for new debt issues

There was just the one deal in the Kangaroo space this week. The Province of Ontario, rated A+ by S & P, returned after an absence of nearly 1 year and issued $40 million 10 year bonds at Swap + 265bps.

The iTraxx Australian CDS index continued its slide, finishing the week at 114.6, down from the previous 117.0. Domestic economic conditions are not exactly buoyant but corporate spreads have been contracting in recent times and the fall in iTraxx is another expression of confidence (or of less pessimism) from investors.

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AUST CORPORATE BONDS

ISSUERMATURITYCOUPON (%)RATINGWEEK
HIGH
WEEK
LOW
CLOSING
YIELD
Δ WEEKΔ MONTH
ANZ9-May-166.75AA-2.422.322.420.110.03
Westpac9-May-166.75AA-2.402.302.400.100.03
Transurban8-Jun-166.75A-3.253.133.250.120.04
Stockland1-Jul-167.5A-3.012.893.010.130.01
Fonterra11-Jul-166.25A+2.802.662.800.130.03
Telstra2-Aug-167.00A2.532.422.530.130.02
Melb Airport25-Aug-167.00A-2.962.822.960.12-0.01
Mirvac Finance16-Sep-168.00BBB+3.143.023.140.130.03
Wesfarmers4-Nov-166.00A-2.742.632.740.120.03
Westpac18-Nov-167.25AA-2.442.322.440.130.03
Suncorp (CB)6-Dec-164.75n/a2.602.442.590.150.07
CBA (CB)25-Jan-175.75n/a2.442.302.440.130.04
Aust Post6-Feb-175.50AA2.712.602.710.120.01
Westpac (CB)6-Feb-175.75n/a2.442.312.440.130.05
NAB15-Feb-176.00AA-2.492.392.490.110.02
Westpac20-Feb-176.00AA-2.492.382.490.120.02
Crown18-Jul-175.75BBB3.413.293.410.120.02
BP Cap5-Sep-174.50A3.002.903.000.10-0.02
BHP18-Oct-173.75A+3.193.083.190.120.14
Telstra15-Nov-174.00A2.802.712.800.100.02
HSBC16-Nov-174.25AA-2.772.662.770.120.03
Westpac24-Jan-184.25AA-2.672.552.670.120.01
CBA25-Jan-184.25AA-2.662.552.660.100.01
NAB7-Mar-187.25AA-2.682.562.680.140.01
ANZ17-Apr-184.25AA-2.732.642.730.11-0.01
NAB23-May-184.00AA-2.752.652.750.130.01
Syd Airport6-Jul-187.75BBB3.263.163.260.12-0.02
ANZ6-Nov-184.50AA-2.882.752.880.130.03
Lendlease13-Nov-185.50BBB-4.174.034.170.150.17
Telstra13-Nov-184.50A2.982.892.980.11-0.02
Westpac25-Feb-194.50AA-2.942.802.940.130.06
Woolworths21-Mar-196.00A-3.713.513.710.200.13
Wesfarmers28-Mar-196.25A-3.223.123.220.120.08
CBA24-Apr-194.25AA-2.972.862.970.130.02
Bris Airport9-Jul-198.00BBB3.463.353.460.130.04
Apple Inc28-Aug-192.85AA+2.842.712.840.14-0.08
Stockland6-Sep-195.50A-3.573.463.560.130.02
DBNGP11-Oct-196.00BBB-4.013.904.010.12-0.01
Westfield Retail23-Oct-195.00A3.583.473.580.120.01
CFS Retail19-Dec-195.00A3.333.233.330.12-0.01
CBA5-Feb-207.25AA-3.143.033.130.11-0.01
Westpac11-Feb-207.25AA-3.153.043.150.12-0.01
Wesfarmers12-Mar-204.75A-3.423.333.420.120.02
Qantas27-Apr-206.50BB+5.344.765.120.120.17
Lendlease13-May-206.00BBB-4.564.434.560.130.24
Melb Airport4-Jun-205.00A-3.503.363.490.140.00
Telstra15-Jul-207.75A3.363.253.360.150.03
Perth Airport23-Jul-206.00BBB3.853.723.840.120.09
Mirvac Fin18-Sep-205.75BBB+3.933.703.860.180.12
Bris Airport21-Oct-206.00BBB3.793.703.790.130.06
Aust Post13-Nov-205.00AA3.213.123.210.110.03
Stockland25-Nov-208.25A-3.773.673.770.130.05
Uni Sydney16-Apr-214.75n/a3.092.993.090.13-0.02
Apple Inc28-Aug-223.70AA+3.533.453.530.11-0.26
Telstra16-Sep-224.00A3.863.753.860.13-0.10
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