21 Mar – 24 Mar 2016

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It was a quiet week in the corporate bond market. Spreads were generally steady, CDS prices were stable and corporate bond issuance was on the low side. There were, however, some corporate bond issues which stood out, either for their size or their composition or indeed for the issuer involved.

Also of interest to the corporate bond sector was the 6 monthly contract roll for the iTraxx index. iTraxx is the index for the cost of insuring corporate bonds against default. A rising index shows that insurers are demanding higher premiums – an early warning sign of distress. Every six months, in March and September, the constituents of the contract are reviewed and occasionally replaced.

itraxx-24mar

The current contract is now the Series 25 contract. Qantas is the new addition to the Index after completing its remarkable corporate transformation and Goodman’s Funds Management as responsible entity for the Goodman Industrial Trust has been removed. The premium change has resulted in the index moving higher by around 18 points. So when looking at the iTraxx chart, the sharp rise is a result of the index change rather than the result of a general rise in risk premiums.

The largest deal belonged to NAB, which continued the recent preference amongst issuers for 2019 maturities. The bank sold $2 billion worth of Feb 2019 FRNs at 3m BBSW + 98bps and followed up with a $200 million issue of fixed May 2019s later in the week.

Credit Union Australia issued $200 million April 2019s at BBSW + 160bps in its inaugural bond market sale.

Also of note were the presence of some smaller, non-bank issuers such as Vicinity Centres, Healthscope and AusNet Services. AusNet has been active in the last two months with deals in USD, SGD and now HKD and this latest issue took the form of March 2028 floating rate bonds to the value of HKD$875 million (AUD $146 million).

corporate-24mar

Healthscope’s previous debt sales were via ASX-listed notes but on this occasion they raised USD$300 million (AUD$400 million) in a US private placement of 10 year fixed bonds.

Vicinity last issued bonds in September when they were known as Federation Centres (and before that Centro). Back then they issued USD$250 million and AUD$75 million in a USPP but their latest issue was in the UK where they issued £350 million (AUD$660 million) worth of 2026 bonds at nearly 200bps above UK gilts.

In the Kangaroo markets, Corporación Andina de Fomento issued $150 million 2021s at ACGB + 182.5bps then followed up later in the week with another $110 million worth of 2026s at ACGB + 184.75bps. International Finance Corporation also sold $50 million July 2026s at ACGB + 58.25bps

Click here for new debt issues
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AUS CORPORATE BONDS

ISSUERMATURITYCOUPON (%)RATINGWEEK
HIGH
WEEK
LOW
CLOSING
YIELD
Δ WEEKΔ MONTH
Stockland1-Jul-167.50A-3.153.113.14-0.060.05
Fonterra11-Jul-166.25A+2.952.922.94-0.040.05
Telstra2-Aug-167.00A2.732.712.71-0.050.03
Melb Airport25-Aug-167.00A-3.153.133.13-0.060.03
Mirvac Finance16-Sep-168.00BBB+3.363.333.330.020.10
Wesfarmers4-Nov-166.00A-3.002.982.980.020.08
Westpac18-Nov-167.25AA-2.652.602.600.010.04
Suncorp (CB)6-Dec-164.75n/a2.792.782.780.010.09
CBA (CB)25-Jan-175.75n/a2.652.622.620.010.09
Aust Post6-Feb-175.50AA2.912.882.89-0.010.10
Westpac (CB)6-Feb-175.75n/a2.652.622.620.020.09
NAB15-Feb-176.00AA-2.692.642.640.050.07
Westpac20-Feb-176.00AA-2.682.622.620.030.05
Crown18-Jul-175.75BBB3.943.893.93-0.010.30
BP Cap5-Sep-174.50A3.323.273.320.000.16
BHP18-Oct-173.75A+3.483.423.420.03-0.13
Telstra15-Nov-174.00A3.042.993.010.040.15
HSBC16-Nov-174.25AA-3.002.952.990.000.19
Westpac24-Jan-184.25AA-2.842.802.800.020.07
CBA25-Jan-184.25AA-2.852.812.810.010.07
NAB7-Mar-187.25AA-2.882.832.830.020.06
ANZ17-Apr-184.25AA-2.922.872.880.030.05
NAB23-May-184.00AA-2.932.882.890.020.11
Syd Airport6-Jul-187.75BBB3.423.373.390.030.17
ANZ6-Nov-184.50AA-3.043.003.000.020.09
Lendlease13-Nov-185.50BBB-4.564.494.510.050.25
Telstra13-Nov-184.50A3.183.123.140.060.17
Westpac25-Feb-194.50AA-3.093.053.050.020.09
Woolworths21-Mar-196.00A-3.913.843.84-0.080.06
Wesfarmers28-Mar-196.25A-3.483.413.430.030.19
CBA24-Apr-194.25AA-3.133.073.080.030.09
Bris Airport9-Jul-198.00BBB3.623.553.580.040.24
Apple Inc28-Aug-192.85AA+3.002.922.980.000.12
Stockland6-Sep-195.50A-3.753.683.700.030.16
DBNGP11-Oct-196.00BBB-4.204.124.160.080.18
Westfield Retail23-Oct-195.00A3.783.703.730.020.19
CFS Retail19-Dec-195.00A3.433.353.370.050.19
CBA5-Feb-207.25AA-3.233.173.190.030.18
Westpac11-Feb-207.25AA-3.243.173.190.030.10
Wesfarmers12-Mar-204.75A-3.713.633.660.010.19
Qantas27-Apr-206.50BB+4.634.574.57-0.08-0.22
Lendlease13-May-206.00BBB-4.804.694.800.040.32
Melb Airport4-Jun-205.00A-3.533.443.470.010.17
Telstra15-Jul-207.75A3.433.363.360.020.12
Perth Airport23-Jul-206.00BBB4.063.964.020.030.20
Mirvac Fin18-Sep-205.75BBB+4.144.044.090.030.22
Bris Airport21-Oct-206.00BBB3.943.863.890.030.20
Aust Post13-Nov-205.00AA3.293.203.20-0.010.16
Stockland25-Nov-208.25A-3.883.793.820.040.14
Uni Sydney16-Apr-214.75Aa13.143.063.080.030.15
Apple Inc28-Aug-223.70AA+3.553.393.390.020.03
Melb Airport15-Sep-224.00A-3.933.773.92-0.150.26
Telstra16-Sep-224.00A3.643.553.600.020.16
CBA (AU)27-May-244.75AA-3.333.243.270.010.13
NAB25-Jun-245.00AA-3.733.643.670.010.13
Wells Fargo & Co.27-Aug-244.75A+4.073.964.06-0.060.17
Uni Sydney28-Aug-253.75Aa13.693.603.630.020.17
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