Summary: Corporate bond spreads 10bps wider on average; swap spreads tighten; iTraxx up another 1 point; local issuance increases; three RMBS transactions; one primary-market kangaroo deal.
Corporate yields generally outpaced the rises of their Commonwealth Government counterparts, producing a 10bps increase in the median spread by the end of the week. The majority of spreads’ week-on-week changes at the individual level were within a range of +6bps to +14bps. There were a couple of notable exceptions; the yields of Qantas October 2023s (spread: 186bps, +16bps) and Qantas October 2026s (spread: 195bps, +17bps) outpaced their benchmarks considerably.
One of the two other measures of corporate risk, swap-to-bond spreads, tightened. The other measure, credit default swap premiums, again increased on average. The Australian credit default swap index, the iTraxx Australia Series 36, finished 1.00 points higher at 94.00 points.
Volumes in the primary market for corporate bonds and notes increased on the back of several large bond issues from major banks. $10.9 billion worth of bonds or notes were priced by local entities or their subsidiaries, whereas in the previous week issuance amounted to $9.0 billion. Asset-backed transactions accounted for $1.3 billion of the $10.0 billion.
Westpac and ANZ kicked off the week’s proceedings on Tuesday night in European markets. Westpac priced £700 million (AUD$1.25 billion) worth of March 2026 covered FRNs at SONIA + 45bps while ANZ priced €1.75 billion (AUD$2.65 billion) worth of March 2025 covered bonds at Mid-swap + 7bps.
NAB joined the covered-bond party on Wednesday night with a €1.5 billion (AUD$2.25 billion) issue of covered March 2027s at Mid-swap + 12bps.
The next day, Westpac issued two tranches of March 2025 bonds, with the $900 million fixed-rate tranche and the $1.6 billion FRN tranche priced at Swap/BBSW + 69bps.
The Bank of Bendigo and Adelaide went down a very similar path at the end of the week. It issued two tranches of March 2025 bonds, with the $100 million fixed-rate tranche and the $600 million FRN tranche priced at Swap/BBSW + 98bps.
There were three primary market transactions for asset-backed securities during the week.
Shift made its debut in this market at the start of the week, raising $150 million for its 2022-1PP Trust over eight tranches. No pricing was made available.
A couple of days later, Humm raised $250 million for its ABS Trust 2022-1 over eight tranches. The $175 million Class tranche was priced at 1m BBSW + 110bps. The securities are backed by receivables originated by Certegy Ezi-Pay.
Pepper raised $1 billion for its Prime 2022-1 Trust on the same day. The Class A1 securities were split into two tranches; the $505 million Class A1 tranche and the $505 million Class A1-G tranche were both priced at 1m BBSW + 96bps.
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There was just the one deal in the primary market for kangaroo bonds. The Industrial Bank of Korea issued two tranches of March 2027 bonds, with the $125 million fixed-rate tranche and the $285 million FRN tranche priced at Swap/BBSW + 93bps.
Interested readers can find more details as well as other bond transactions in our tables via the link below.
| ISSUER | MATURITY | COUPON (%) | RATING | WEEK HIGH | WEEK LOW | CLOSING YIELD | Δ WEEK | Δ MONTH |
|---|---|---|---|---|---|---|---|---|
| NAB | 24-Mar-22 | 3.25 | AA- | 0.25 | 0.15 | 0.25 | 0.10 | 0.10 |
| CBA | 30-Mar-22 | 3.25 | AA- | 0.26 | 0.14 | 0.26 | 0.14 | 0.12 |
| Optus | 17-Jun-22 | 4.00 | A | 0.67 | 0.57 | 0.67 | 0.16 | 0.23 |
| GE Capital | 8-Aug-22 | 5.50 | BBB+ | 0.76 | 0.72 | 0.72 | 0.17 | 0.27 |
| Optus | 23-Aug-22 | 3.25 | A | 0.80 | 0.66 | 0.80 | 0.22 | 0.27 |
| Apple Inc | 28-Aug-22 | 3.70 | AA+ | 0.56 | 0.51 | 0.55 | 0.11 | 0.19 |
| Wells Fargo | 7-Sep-22 | 5.25 | A- | 0.88 | 0.76 | 0.88 | 0.20 | 0.36 |
| Melbourne Airport | 15-Sep-22 | 4.00 | BBB+ | 0.78 | 0.64 | 0.78 | 0.15 | 0.24 |
| Telstra | 16-Sep-22 | 4.00 | A | 0.79 | 0.63 | 0.79 | 0.22 | 0.33 |
| Stockland | 23-Nov-22 | 4.50 | A- | 0.91 | 0.71 | 0.91 | 0.25 | 0.36 |
| ANZ | 16-Aug-23 | 5.00 | AA- | 1.51 | 1.30 | 1.51 | 0.29 | 0.44 |
| Transpower NZ | 28-Aug-23 | 5.75 | AA- | 1.49 | 1.31 | 1.49 | 0.28 | 0.43 |
| Mirvac Finance | 18-Sep-23 | 3.50 | BBB+ | 1.79 | 1.56 | 1.79 | 0.29 | 0.48 |
| Qantas | 10-Oct-23 | 4.40 | BB+ | 2.62 | 2.32 | 2.62 | 0.33 | 0.55 |
| Australia Post | 13-Nov-23 | 5.50 | A+ | 1.71 | 1.51 | 1.71 | 0.25 | 0.40 |
| Westpac | 21-Nov-23 | 4.40 | AA- | 1.76 | 1.55 | 1.76 | 0.32 | 0.50 |
| Fonterra | 26-Feb-24 | 5.50 | A- | 2.01 | 1.79 | 2.01 | 0.31 | 0.57 |
| NAB | 11-Mar-24 | 5.00 | AA- | 2.00 | 1.78 | 2.00 | 0.34 | 0.56 |
| Rabobank Nederland (Aust) | 11-Apr-24 | 5.50 | A+ | 2.12 | 1.92 | 2.12 | 0.28 | 0.48 |
| CBA | 27-May-24 | 4.75 | AA- | 2.06 | 1.85 | 2.06 | 0.23 | 0.48 |
| AusNet | 21-Jun-24 | 4.00 | BBB+ | 2.66 | 2.46 | 2.66 | 0.27 | 0.64 |
| Macquarie Bank | 7-Aug-24 | 1.75 | A+ | 2.48 | 2.22 | 2.48 | 0.29 | 0.55 |
| Wells Fargo | 27-Aug-24 | 4.75 | A+ | 2.63 | 2.33 | 2.63 | 0.38 | 0.65 |
| University of Sydney | 28-Aug-25 | 3.75 | Aa1 | 2.72 | 2.47 | 2.72 | 0.32 | 0.57 |
| Apple Inc | 10-Jun-26 | 3.60 | AA+ | 2.75 | 2.49 | 2.75 | 0.33 | 0.55 |
| CBA | 11-Jun-26 | 4.20 | AA- | 2.83 | 2.58 | 2.83 | 0.31 | 0.56 |
| ANZ | 22-Jul-26 | 4.00 | AA- | 2.88 | 2.62 | 2.88 | 0.35 | 0.58 |
| Qantas | 12-Oct-26 | 4.75 | BB+ | 4.05 | 3.67 | 4.05 | 0.42 | 0.73 |
| Australia Pacific Airports | 4-Nov-26 | 3.75 | BBB+ | 3.48 | 3.15 | 3.48 | 0.38 | 0.66 |
| CBA | 17-Nov-26 | 3.25 | AA- | 2.69 | 2.46 | 2.69 | 0.36 | 0.58 |
| Australia Post | 1-Dec-26 | 4.00 | A+ | 2.86 | 2.58 | 2.86 | 0.31 | 0.52 |
| WSO Finance | 31-Mar-27 | 4.50 | A- | 3.30 | 3.02 | 3.30 | 0.32 | 0.66 |
| Telstra | 19-Apr-27 | 4.00 | A | 3.15 | 2.87 | 3.15 | 0.33 | 0.65 |
| Asciano | 12-May-27 | 5.40 | BBB- | 4.46 | 4.13 | 4.46 | 0.38 | 0.79 |
| Fonterra | 2-Nov-27 | 4.00 | A- | 3.32 | 3.04 | 3.32 | 0.34 | 0.72 |
| Macquarie | 15-Dec-27 | 4.15 | BBB+ | 3.76 | 3.50 | 3.76 | 0.31 | 0.58 |
| AusNet | 21-Aug-28 | 4.20 | A- | 3.66 | 3.37 | 3.66 | 0.31 | 0.75 |