01 Aug – 05 Aug 2016

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The risk of corporate default fell according to the index of credit default swap prices. iTraxx finished the week at 107.8, down from the previous week’s reading of 109.7. The other major measure of corporate risk, corporate spreads to government bonds, also indicated more confidence. Corporate spreads were generally lower over the week even though they initially rose and failed to keep pace with Commonwealth benchmarks on the day of the RBA’s rate cut. As benchmark yields are at record lows and low spreads are also attractive for issuers, “it has never been cheaper to issue debt for Australian corporates…debt is cheap” according to CBA.

itraxx-bond-5aug

Despite this, corporate bond issuance dried up this week and if it were not for the $750 million of non-conforming mortgages sold by RESIMAC and $170 million of RMBS refinanced by Bank of Queensland REDS Trust, bond issuance would have close to negligible.  The only vanilla bond issue this week by a domestic issuer seems to have been a $125 million sale of May 2019s by Mercedes-Benz Australia.

In contrast the Kangaroo market was bouncing. Canadian issuers made a return and the Province of Quebec issued $80 million May 2026s at ACGB + 82.75bps while the Province of Manitoba issued $70 million June 2026s in two tranches; one for $50 million at ACGB + 80.5bps and the other for $20 million at ACGB + 81bps.

International Finance Corporation issued two tranches of July 2026s on two different days. The first was for $70 million at ACGB + 56.5bps and the second was $20 million July 2026s at ACGB + 55.75bps. Landeskreditbank B.W.F issued $200 million February 2021s at ACGB + 76.25bps and Inter-American Development Bank issued $50 million June 2026s at ACGB + 51.5bps.

The largest deal of the week was also the first of the week and it was done by KfW Bankengruppe which issued $450 million February 2021s at ACGB + 61.5bps and a tad more than the price of the $300 million worth done in May.

All these and other bond issues can be found via the link below.
corporate-bonds-5aug
Click here for new debt issues

AUS CORPORATE BONDS

ISSUERMATURITYCOUPON (%)RATINGWEEK
HIGH
WEEK
LOW
CLOSING
YIELD
Δ WEEKΔ MONTH
Melb Airport25-Aug-167.00A-2.382.242.24-0.18-0.29
Mirvac Finance16-Sep-168.00BBB+2.512.412.42-0.12-0.30
Wesfarmers4-Nov-166.00A-2.552.462.46-0.12-0.20
Westpac18-Nov-167.25AA-2.062.022.02-0.07-0.14
Suncorp (CB)6-Dec-164.75n/a2.212.132.14-0.10-0.20
CBA (CB)25-Jan-175.75n/a2.052.012.02-0.07-0.15
Aust Post6-Feb-175.50AA2.432.372.38-0.07-0.16
Westpac (CB)6-Feb-175.75n/a2.072.022.04-0.06-0.14
NAB15-Feb-176.00AA-2.092.042.04-0.08-0.13
Westpac20-Feb-176.00AA-2.112.072.07-0.07-0.15
Crown18-Jul-175.75BBB3.022.932.93-0.11-0.63
BP Cap5-Sep-174.50A2.692.642.65-0.07-0.14
BHP18-Oct-173.75A+2.782.662.66-0.15-0.29
Telstra15-Nov-174.00A2.492.402.40-0.12-0.22
HSBC16-Nov-174.25AA-2.412.362.38-0.06-0.11
Westpac24-Jan-184.25AA-2.272.222.23-0.07-0.13
CBA25-Jan-184.25AA-2.272.222.23-0.07-0.13
NAB7-Mar-187.25AA-2.272.222.23-0.06-0.11
ANZ17-Apr-184.25AA-2.322.272.28-0.07-0.13
NAB23-May-184.00AA-2.312.262.28-0.06-0.10
Syd Airport6-Jul-187.75BBB2.872.802.80-0.10-0.14
ANZ6-Nov-184.50AA-2.442.392.40-0.07-0.12
Lendlease13-Nov-185.50BBB-3.353.283.28-0.10-0.44
Telstra13-Nov-184.50A2.612.552.55-0.08-0.14
Westpac25-Feb-194.50AA-2.472.432.45-0.05-0.09
Woolworths21-Mar-196.00A-3.243.203.20-0.08-0.25
Wesfarmers28-Mar-196.25A-2.882.822.82-0.09-0.18
CBA24-Apr-194.25AA-2.502.452.48-0.06-0.10
Bris Airport9-Jul-198.00BBB3.123.083.11-0.05-0.10
Apple Inc28-Aug-192.85AA+2.362.322.33-0.06-0.15
Stockland6-Sep-195.50A-3.022.862.86-0.19-0.39
DBNGP11-Oct-196.00BBB-3.703.653.68-0.04-0.04
Westfield Retail23-Oct-195.00A2.832.772.81-0.05-0.13
CBA5-Feb-207.25AA-2.592.552.58-0.04-0.09
Westpac11-Feb-207.25AA-2.592.552.58-0.03-0.08
Wesfarmers12-Mar-204.75A-3.073.023.02-0.08-0.16
Qantas27-Apr-206.50BB+4.054.004.04-0.03-0.14
Lendlease13-May-206.00BBB-3.863.813.82-0.05-0.47
Melb Airport4-Jun-205.00A-2.902.852.88-0.03-0.09
Telstra15-Jul-207.75A2.742.682.68-0.08-0.17
Perth Airport23-Jul-206.00BBB3.483.433.46-0.03-0.07
Mirvac Fin18-Sep-205.75BBB+3.403.333.33-0.08-0.28
Bris Airport21-Oct-206.00BBB3.343.263.26-0.09-0.20
Aust Post13-Nov-205.00AA2.682.632.66-0.03-0.07
Stockland25-Nov-208.25A-3.093.043.07-0.03-0.21
Uni Sydney16-Apr-214.75Aa12.492.432.44-0.06-0.13
Apple Inc28-Aug-223.70AA+2.762.692.70-0.06-0.15
Melb Airport15-Sep-224.00A-3.263.183.21-0.03-0.09
Telstra16-Sep-224.00A2.932.862.89-0.04-0.16
CBA (AU)27-May-244.75AA-2.732.602.66-0.01-0.06
Wells Fargo & Co.27-Aug-244.75A+3.383.293.33-0.02-0.03
Uni Sydney28-Aug-253.75Aa12.922.822.85-0.02-0.11