25 Jul – 29 Jul 2016

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Corporate spreads widened this week as yields in the corporate segment generally moved up while benchmark 3 year yields were stable. Some of the larger movements were at the shorter end (Crown 2017s, Telcom NZ 2018s, Mirvac 2018s) but there does not seem to be any noticeable pattern here and the size of the moves are likely to be due to lack of liquidity and mark-to-market closes. The iTraxx Series 25 credit default index was essentially unchanged at 109.7 (previously 110.0) so it appears the market’s attitude with respect to corporate defaults appears to be largely the same as the previous week hence any spread widening in corporate bonds is just part of normal week-to-week variation.

itraxx-29jul

Bond issuance was down, considerably so among domestic issuers but less so in the Kangaroo market. Domestically we counted $1.1 billion worth of bonds compared to $4.8 billion to the week before while the in the Kangaroo market totally issuance dropped from $2.3 billion to $1.7 billion.

The largest deal was CBA’s issue of $500 million worth of August 2017s while all the other domestic sales were relatively small. In what must be a related deal NAB and ANZ issued zero coupon bonds with the same maturity date (August 2046) worth a combined USD$204 million (AUD$268 million). The issues comprised a USD$40 million and USD$50 million tranche from NAB and a $USD114 million tranche from ANZ.

corporate-bond-29jul

Westpac issued CNY300 million (AUD$60 million) July 2017s and then announced the issue of NZD$250 million (AUD$236 million) hybrids which will only be available to New Zealand residents. The tier 2 notes will have the now-standard Basel 3 non-viability clauses which is why the indicative margin above Swap is from 260bps to 280bps.

In the Kangaroo market dual tranche deals were popular. International Bank Reconstruction & Development issued bonds worth $850 million in two tranches comprising $150 million October 2026s at Swap + 49bps and $700 million January 2021s at Swap + 36bps. Bank of America’s two tranche deal was in the form of August 2021 bonds with fixed and floating tranches comprising $550 million FRNs at 3m BBSW + 155bps and $200 million fixed at Swap + 155bps. The BBB+ issuer made a similar transaction in May 2013 with another two tranche deal worth $900 million but that deal was done at Swap/BBSW + 142bps.

Regular issuers Nederlandse Waterschapsbank issued $35 million September 2026s at ACGB + 88.5bps while KommuneKredit started off the week with a $30 million issued of November 2026 bonds at ACGB + 86.25bps, then followed a couple of days later with another $25 million at ACGB + 89bps.

All these and other bond issues can be found via the link below.

Click here for new debt issues

AUS CORPORATE BONDS

ISSUERMATURITYCOUPON (%)RATINGWEEK
HIGH
WEEK
LOW
CLOSING
YIELD
Δ WEEKΔ MONTH
Melb Airport25-Aug-167.00A-2.492.412.41-0.08-0.21
Mirvac Finance16-Sep-168.00BBB+2.622.542.54-0.08-0.18
Wesfarmers4-Nov-166.00A-2.612.582.580.02-0.02
Westpac18-Nov-167.25AA-2.112.092.090.00-0.05
Suncorp (CB)6-Dec-164.75n/a2.262.242.24-0.01-0.12
CBA (CB)25-Jan-175.75n/a2.132.082.08-0.01-0.06
Aust Post6-Feb-175.50AA2.512.462.46-0.03-0.06
Westpac (CB)6-Feb-175.75n/a2.152.102.100.00-0.05
NAB15-Feb-176.00AA-2.152.122.12-0.01-0.02
Westpac20-Feb-176.00AA-2.162.142.140.02-0.03
Crown18-Jul-175.75BBB3.093.053.050.04-0.24
BP Cap5-Sep-174.50A2.762.722.720.00-0.02
BHP18-Oct-173.75A+2.862.812.810.06-0.12
Telstra15-Nov-174.00A2.562.522.520.05-0.07
HSBC16-Nov-174.25AA-2.502.442.44-0.05-0.11
Westpac24-Jan-184.25AA-2.352.302.30-0.01-0.05
CBA25-Jan-184.25AA-2.352.302.30-0.01-0.05
NAB7-Mar-187.25AA-2.342.292.300.00-0.04
ANZ17-Apr-184.25AA-2.392.342.350.02-0.05
NAB23-May-184.00AA-2.382.342.340.01-0.04
Syd Airport6-Jul-187.75BBB2.942.892.900.01-0.01
ANZ6-Nov-184.50AA-2.512.462.470.02-0.04
Lendlease13-Nov-185.50BBB-3.483.383.380.00-0.30
Telstra13-Nov-184.50A2.682.632.640.03-0.03
Westpac25-Feb-194.50AA-2.552.502.500.00-0.05
Woolworths21-Mar-196.00A-3.323.273.270.02-0.16
Wesfarmers28-Mar-196.25A-2.952.912.910.05-0.05
CBA24-Apr-194.25AA-2.592.532.53-0.01-0.06
Bris Airport9-Jul-198.00BBB3.203.153.150.01-0.03
Apple Inc28-Aug-192.85AA+2.442.392.39-0.01-0.08
Stockland6-Sep-195.50A-3.123.053.050.08-0.19
DBNGP11-Oct-196.00BBB-3.773.723.730.00-0.01
Westfield Retail23-Oct-195.00A2.912.862.86-0.02-0.06
CBA5-Feb-207.25AA-2.682.622.620.00-0.06
Westpac11-Feb-207.25AA-2.682.612.61-0.01-0.07
Wesfarmers12-Mar-204.75A-3.153.093.090.03-0.06
Qantas27-Apr-206.50BB+4.134.074.07-0.01-0.07
Lendlease13-May-206.00BBB-4.043.883.88-0.04-0.37
Melb Airport4-Jun-205.00A-2.982.922.92-0.01-0.09
Telstra15-Jul-207.75A2.832.762.760.03-0.10
Perth Airport23-Jul-206.00BBB3.563.503.50-0.01-0.04
Mirvac Fin18-Sep-205.75BBB+3.513.413.410.01-0.22
Bris Airport21-Oct-206.00BBB3.423.363.36-0.02-0.12
Aust Post13-Nov-205.00AA2.762.692.69-0.01-0.04
Stockland25-Nov-208.25A-3.173.103.10-0.03-0.22
Uni Sydney16-Apr-214.75Aa12.562.492.490.02-0.06
Apple Inc28-Aug-223.70AA+2.832.752.75-0.03-0.14
Melb Airport15-Sep-224.00A-3.323.243.24-0.01-0.19
Telstra16-Sep-224.00A3.012.922.92-0.02-0.15
CBA (AU)27-May-244.75AA-2.772.682.68-0.05-0.16
Wells Fargo & Co.27-Aug-244.75A+3.443.353.35-0.05-0.11
Uni Sydney28-Aug-253.75Aa12.962.872.88-0.02-0.14