06 Jun – 10 Jun 2016

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Corporate spreads generally contracted during the week, perhaps as investors sought assets to stem the tide of ever-diminishing yields and in spite of credit risk increasing marginally. Credit default swap prices increased with the iTraxx CDS index rising from 128.1 to 129.1.

itraxx-yieldreport-10jun

Primary market issuance was down compared to the previous week due to fewer deals going through in the Kangaroo market but there were a few prominent sales from ANZ, Westpac and QBE. ANZ was inundated with offers for its ground-breaking hybrid issue in the US and ended up selling USD$1billion (AUD$1.351 billion) of them at Swap + 515bps. It also issued a somewhat unusual line of bonds in sense the bonds sold are zero coupon bonds with a 2046 maturity. Investors are likely to see more of this type given current yields around the world. Westpac Trust (NZ), issued covered June2021 bonds worth €750 million (AUD$1.136 million) while QBE Insurance Group issued USD$600 million (AUD$810 million) 2046 reset AT1 hybrids as it went about replacing non-Basel 3 capital.  Other transactions worth noting were from Transurban Queensland which issued CHF200 million (AUD$278 million) 2023s at Swap + 98bps while IMB Bank, formerly known as Illawarra Mutual, issued $30million June 2021 FRNS at 3m BBSW + 375bps.

corporate-yield-10jun

In the Kangaroo market the value of transactions was much reduced over the week with just the two transactions worth a combined $425 million. Fonterra Co-operative Group returned after a two year absence to issue $125 million June 2026s at Swap + 170bps while Canadian Imperial Bank of Commerce stuck to its usual practise of issuing covered floating rate bonds with the issue of $300 million worth of June 2020s at BBSW + 65bps.

All these and other bond issues can be found via the link below.
As a note to readers, last week we reported figures for NAB’s latest RMBS deal based on a preliminary ratings report by Fitch. The issue was later upsized from $750 million to $2 billion.

Click here for new debt issues

AUS CORPORATE BONDS

ISSUERMATURITYCOUPON (%)RATINGWEEK
HIGH
WEEK
LOW
CLOSING
YIELD
Δ WEEKΔ MONTH
Stockland1-Jul-167.50A-2.522.502.50-0.04-0.17
Fonterra11-Jul-166.25A+2.412.392.39-0.04-0.21
Telstra2-Aug-167.00A2.332.302.30-0.05-0.11
Melb Airport25-Aug-167.00A-2.732.712.71-0.02-0.06
Mirvac Finance16-Sep-168.00BBB+3.042.922.940.02-0.04
Wesfarmers4-Nov-166.00A-2.722.662.69-0.010.06
Westpac18-Nov-167.25AA-2.232.192.220.01-0.04
Suncorp (CB)6-Dec-164.75n/a2.412.392.400.00-0.04
CBA (CB)25-Jan-175.75n/a2.242.192.230.04-0.04
Aust Post6-Feb-175.50AA2.612.572.600.010.05
Westpac (CB)6-Feb-175.75n/a2.252.202.240.03-0.03
NAB15-Feb-176.00AA-2.242.192.230.02-0.03
Westpac20-Feb-176.00AA-2.272.222.25-0.01-0.02
Crown18-Jul-175.75BBB3.383.333.37-0.230.23
BP Cap5-Sep-174.50A2.832.782.830.02-0.03
BHP18-Oct-173.75A+3.012.963.010.010.03
Telstra15-Nov-174.00A2.662.612.66-0.020.07
HSBC16-Nov-174.25AA-2.612.552.600.05-0.01
Westpac24-Jan-184.25AA-2.432.372.420.000.00
CBA25-Jan-184.25AA-2.422.372.410.000.02
NAB7-Mar-187.25AA-2.422.362.410.000.00
ANZ17-Apr-184.25AA-2.482.422.45-0.010.02
NAB23-May-184.00AA-2.472.412.45-0.010.01
Syd Airport6-Jul-187.75BBB3.002.942.990.00-0.02
ANZ6-Nov-184.50AA-2.592.532.57-0.030.01
Lendlease13-Nov-185.50BBB-3.763.703.74-0.050.04
Telstra13-Nov-184.50A2.772.712.75-0.020.04
Westpac25-Feb-194.50AA-2.632.572.59-0.02-0.04
Woolworths21-Mar-196.00A-3.483.423.46-0.060.17
Wesfarmers28-Mar-196.25A-3.063.003.03-0.040.04
CBA24-Apr-194.25AA-2.662.602.62-0.03-0.03
Bris Airport9-Jul-198.00BBB3.283.223.25-0.030.06
Apple Inc28-Aug-192.85AA+2.612.532.55-0.050.04
Stockland6-Sep-195.50A-3.303.243.27-0.080.02
DBNGP11-Oct-196.00BBB-3.823.763.80-0.02-0.01
Westfield Retail23-Oct-195.00A3.022.962.99-0.03-0.05
CBA5-Feb-207.25AA-2.772.712.72-0.04-0.05
Westpac11-Feb-207.25AA-2.762.702.72-0.03-0.06
Wesfarmers12-Mar-204.75A-3.253.193.21-0.07-0.01
Qantas27-Apr-206.50BB+4.244.184.20-0.040.02
Lendlease13-May-206.00BBB-4.354.294.31-0.08-0.07
Melb Airport4-Jun-205.00A-3.113.063.080.01-0.03
Telstra15-Jul-207.75A2.952.892.91-0.040.00
Perth Airport23-Jul-206.00BBB3.633.573.59-0.04-0.05
Mirvac Fin18-Sep-205.75BBB+3.733.673.69-0.030.02
Bris Airport21-Oct-206.00BBB3.573.523.53-0.040.02
Aust Post13-Nov-205.00AA2.832.772.79-0.05-0.03
Stockland25-Nov-208.25A-3.423.363.38-0.05-0.04
Uni Sydney16-Apr-214.75Aa12.672.612.62-0.07-0.09
Apple Inc28-Aug-223.70AA+2.992.922.93-0.040.00
Melb Airport15-Sep-224.00A-3.563.493.50-0.090.00
Telstra16-Sep-224.00A3.203.133.14-0.08-0.07
CBA (AU)27-May-244.75AA-2.902.672.67-0.24-0.26
Wells Fargo & Co.27-Aug-244.75A+3.613.523.53-0.04-0.11
Uni Sydney28-Aug-253.75Aa13.173.093.10-0.12-0.20