29 Feb – 04 Mar 2016

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It was a fairly quiet week in terms of corporate issuance, with only a few sales into the domestic market and typically quite small in size. (It may be just coincidence but almost all of them had March 2021 maturity dates.) Toyota Motor Corporation issued $99 million March 2021s, Westpac issued $64.3 million March 2021s and Credit Suisse (Sydney) issued $175 million fixed and $325 million floating at Swap/BBSW + 195bps, both maturing in March 2021.

AusNet Services almost bucked the trend and issued SGD$200 million worth of 60 year bonds. They do however have a call date in March 2021. The subordinated/hybrid nature of the issue means it will likely be classified as equity, rather than debt and the 500 bps penalty rate for not calling the issue will probably lead to a March 2021 redemption date. The issue is part of the company’s $600m -$700m debt issuing programme that was pre-emptively rated by Moody’s earlier this year.

The asset backed market seems to be alive and kicking once again and Volkswagen returned with their second ABS for the year, only a week after their last one back which was the first for 2016. The Volkswagen Driver Australia Three Trust issued four tranches of securities for a total of $531 million and it was followed by an RMBS issue from CBA’s Medallion Trust a few days later. Initially thought to be around the $750 million mark, by the time it was completed the trust had issued securities worth $1.575 billion.

In the Kangaroo market, the pace of issuance was sedate and there were just the two complete sales in the week. KfW Bankengruppe sold $200 million worth of a new line of September 2026s at ACGB + 66bps, which is 10bps more than it paid in July for a similar 10 year issue. Eurofima $55 million December 2025s at ACGB + 66.75bps just over a month after they last tapped this line at ACGB + 68bp.

It looks as if the concern over Australian banks is dissipating as the iTraxx Australian index dropped back again over the week  and is normal back to more “normal” levels. The index finished at 143.5 down from 158.90 and well off the recent 170+ peak. Bank share prices have rebounded quite strongly since the ‘big short’ scare from the previous week.

itraxx-4mar-yield

Out chart of the week shows how the credit spread on Lend Lease bonds versus government bonds has moved sharply wider since May 2015 yet Mirvac and Stockland bond spreads have remained relatively stable.

asx-4mar-yield

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AUS CORPORATE BONDS

ISSUERMATURITYCOUPON (%)RATINGWEEK
HIGH
WEEK
LOW
CLOSING
YIELD
Δ WEEKΔ MONTH
ANZ9-May-166.75AA-2.472.452.470.03-0.01
Westpac9-May-166.75AA-2.482.472.480.03-0.02
Transurban8-Jun-166.75A-3.183.173.170.00-0.01
Stockland1-Jul-167.50A-3.163.093.160.080.13
Fonterra11-Jul-166.25A+2.962.902.960.080.06
Telstra2-Aug-167.00A2.752.682.750.080.12
Melb Airport25-Aug-167.00A-3.163.093.160.080.16
Mirvac Finance16-Sep-168.00BBB+3.333.253.330.100.13
Wesfarmers4-Nov-166.00A-2.972.882.970.110.09
Westpac18-Nov-167.25AA-2.642.552.640.110.09
Suncorp (CB)6-Dec-164.75n/a2.772.682.770.110.11
CBA (CB)25-Jan-175.75n/a2.612.512.610.120.08
Aust Post6-Feb-175.50AA2.872.772.870.120.12
Westpac (CB)6-Feb-175.75n/a2.612.512.610.120.08
NAB15-Feb-176.00AA-2.662.562.660.120.08
Westpac20-Feb-176.00AA-2.662.562.660.120.08
Crown18-Jul-175.75BBB3.843.663.840.180.31
BP Cap5-Sep-174.50A3.263.133.260.130.19
BHP18-Oct-173.75A+3.603.503.590.100.09
Telstra15-Nov-174.00A2.962.832.960.130.10
HSBC16-Nov-174.25AA-2.932.802.930.140.11
Westpac24-Jan-184.25AA-2.832.692.830.150.10
CBA25-Jan-184.25AA-2.842.702.840.150.11
NAB7-Mar-187.25AA-2.862.732.860.140.13
ANZ17-Apr-184.25AA-2.932.792.930.150.13
NAB23-May-184.00AA-2.882.752.880.140.10
Syd Airport6-Jul-187.75BBB3.323.173.320.140.12
ANZ6-Nov-184.50AA-3.022.883.020.140.13
Lendlease13-Nov-185.50BBB-4.434.274.430.160.18
Telstra13-Nov-184.50A3.082.923.080.150.09
Westpac25-Feb-194.50AA-3.072.913.070.140.14
Woolworths21-Mar-196.00A-3.943.753.940.180.16
Wesfarmers28-Mar-196.25A-3.383.213.380.160.16
CBA24-Apr-194.25AA-3.092.943.090.140.11
Bris Airport9-Jul-198.00BBB3.473.303.470.160.08
Apple Inc28-Aug-192.85AA+2.982.812.980.150.24
Stockland6-Sep-195.50A-3.643.473.640.150.13
DBNGP11-Oct-196.00BBB-4.083.914.080.150.15
Westfield Retail23-Oct-195.00A3.673.503.670.150.10
CFS Retail19-Dec-195.00A3.313.153.310.140.09
CBA5-Feb-207.25AA-3.112.943.110.160.07
Westpac11-Feb-207.25AA-3.183.023.180.140.10
Wesfarmers12-Mar-204.75A-3.593.413.590.160.16
Qantas27-Apr-206.50BB+4.694.564.69-0.04-0.17
Lendlease13-May-206.00BBB-4.674.494.670.190.17
Melb Airport4-Jun-205.00A-3.403.233.400.150.04
Telstra15-Jul-207.75A3.353.173.350.140.07
Perth Airport23-Jul-206.00BBB3.953.773.950.160.12
Mirvac Fin18-Sep-205.75BBB+3.993.823.990.160.08
Bris Airport21-Oct-206.00BBB3.823.653.820.170.14
Aust Post13-Nov-205.00AA3.163.003.160.130.08
Stockland25-Nov-208.25A-3.763.603.760.140.08
Uni Sydney16-Apr-214.75Aa13.032.863.030.140.03
Apple Inc28-Aug-223.70AA+3.443.283.440.140.07
Melb Airport15-Sep-224.00A-3.763.583.750.160.01
Telstra16-Sep-224.00A3.553.383.550.16-0.02
CBA (AU)27-May-244.75AA-3.243.063.230.16-0.06
NAB25-Jun-245.00AA-3.643.463.630.16-0.08
Wells Fargo & Co.27-Aug-244.75A+4.033.824.020.190.11
Uni Sydney28-Aug-253.75Aa13.603.423.590.16-0.05
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