Summary: Corporate bond spreads 1bp tighter on average; swap spreads noticeably wider; iTraxx up 7 points; issuance volumes ease; one primary-market kangaroo deal, no RMBS transactions.
Corporate spreads finished the week about 1bp tighter on average as their yields generally tracked their Commonwealth counterparts. The majority of spreads’ week-on-week changes at the individual level were within a range of -2bps to +8bps. The only notable exception was Commonwealth Bank’s May 2024s (spread: 87bps; +11bps).
One of the two other main measures of corporate risk, swap-to-bond spreads, widened noticeably along the curve. The other measure, credit default swap premiums, also increased. The Australian credit default swap index, the iTraxx Australia Series 36, finished 7.00 points higher at 98.50 points.
Volumes in the primary market for corporate bonds and notes eased back in the absence of a deal the size of CSL’s jumbo-sized US-dollar issue in the previous week. $4.0 billion worth of bonds or notes were priced by local entities or their subsidiaries, whereas in the previous week issuance amounted to $6.0 billion. There were no asset-backed transactions.
US dollar deals were prominent. Goodman Group raised USD$500 million (AUD$700 million) on Wednesday night via an issue of May 2032s.
At about the same time, Mineral Resources raised $USD$1.25 billion (AUD$1.75 billion) over two over two equal-sized tranches of fixed-rate callable bonds. The November 2027s are callable in November 2024 and the May 2030s are callable in May 2025.
A day later, Royal Bank of Canada’s Sydney branch raised $1.5 billion in the local market, also over two equal-sized tranches of May 2024 covered bonds. The fixed-rate tranche was priced at Swap + 70bps and the floating-rate tranche was priced at BBSW + 70bps.
There was just the one deal in the primary market for kangaroo bonds. Rentenbank tapped its April 2028s for $500 million at Swap + 40bps.
In ratings news, Moody’s assigned a Baa2 rating to AGL Australia in the lead up to the demerger of AGL Energy. Moody’s also assigned an A3 rating to CSL.
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 |
|---|---|---|---|---|---|---|---|---|
| Optus | 17-Jun-22 | 4.00 | A | 0.87 | 0.75 | 0.82 | 0.03 | 0.16 |
| GE Capital | 8-Aug-22 | 5.50 | BBB+ | 1.37 | 1.15 | 1.37 | 0.22 | 0.52 |
| Optus | 23-Aug-22 | 3.25 | A | 1.33 | 1.18 | 1.28 | 0.08 | 0.43 |
| Apple Inc | 28-Aug-22 | 3.70 | AA+ | 1.18 | 0.99 | 1.18 | 0.20 | 0.50 |
| Wells Fargo | 7-Sep-22 | 5.25 | A- | 1.61 | 1.44 | 1.61 | 0.16 | 0.47 |
| Melbourne Airport | 15-Sep-22 | 4.00 | BBB+ | 1.31 | 1.13 | 1.27 | 0.12 | 0.42 |
| Telstra | 16-Sep-22 | 4.00 | A | 1.38 | 1.24 | 1.38 | 0.13 | 0.48 |
| Stockland | 23-Nov-22 | 4.50 | A- | 1.63 | 1.51 | 1.59 | 0.12 | 0.38 |
| ANZ | 16-Aug-23 | 5.00 | AA- | 2.75 | 2.57 | 2.75 | 0.18 | 0.87 |
| Transpower NZ | 28-Aug-23 | 5.75 | AA- | 2.76 | 2.63 | 2.76 | 0.14 | 0.90 |
| Mirvac Finance | 18-Sep-23 | 3.50 | BBB+ | 3.01 | 2.89 | 3.01 | 0.19 | 0.83 |
| Qantas | 10-Oct-23 | 4.40 | BB+ | 3.78 | 3.65 | 3.78 | 0.15 | 0.77 |
| Australia Post | 13-Nov-23 | 5.50 | A+ | 2.89 | 2.74 | 2.89 | 0.12 | 0.76 |
| Westpac | 21-Nov-23 | 4.40 | AA- | 2.99 | 2.85 | 2.99 | 0.12 | 0.83 |
| Fonterra | 26-Feb-24 | 5.50 | A- | 3.27 | 3.20 | 3.27 | 0.14 | 0.83 |
| NAB | 11-Mar-24 | 5.00 | AA- | 3.11 | 3.04 | 3.11 | 0.05 | 0.67 |
| Rabobank Nederland (Aust) | 11-Apr-24 | 5.50 | A+ | 3.31 | 3.21 | 3.31 | 0.09 | 0.75 |
| CBA | 27-May-24 | 4.75 | AA- | 3.31 | 3.11 | 3.31 | 0.18 | 0.80 |
| AusNet | 21-Jun-24 | 4.00 | BBB+ | 3.88 | 3.80 | 3.88 | 0.08 | 0.73 |
| Macquarie Bank | 7-Aug-24 | 1.75 | A+ | 3.66 | 3.50 | 3.66 | 0.12 | 0.73 |
| Wells Fargo | 27-Aug-24 | 4.75 | A+ | 3.84 | 3.78 | 3.84 | 0.05 | 0.71 |
| University of Sydney | 28-Aug-25 | 3.75 | Aa1 | 3.64 | 3.57 | 3.64 | 0.01 | 0.47 |
| Apple Inc | 10-Jun-26 | 3.60 | AA+ | 3.71 | 3.64 | 3.71 | 0.04 | 0.52 |
| CBA | 11-Jun-26 | 4.20 | AA- | 3.85 | 3.75 | 3.85 | 0.06 | 0.49 |
| ANZ | 22-Jul-26 | 4.00 | AA- | 3.85 | 3.76 | 3.85 | 0.05 | 0.47 |
| Qantas | 12-Oct-26 | 4.75 | BB+ | 5.05 | 4.97 | 5.05 | 0.04 | 0.55 |
| Australia Pacific Airports | 4-Nov-26 | 3.75 | BBB+ | 4.50 | 4.42 | 4.50 | 0.05 | 0.59 |
| CBA | 17-Nov-26 | 3.25 | AA- | 3.84 | 3.76 | 3.84 | 0.03 | 0.63 |
| Australia Post | 1-Dec-26 | 4.00 | A+ | 3.83 | 3.75 | 3.83 | 0.04 | 0.51 |
| WSO Finance | 31-Mar-27 | 4.50 | A- | 4.29 | 4.21 | 4.29 | 0.04 | 0.50 |
| Telstra | 19-Apr-27 | 4.00 | A | 4.10 | 4.04 | 4.10 | 0.02 | 0.49 |
| Vicinity Centre | 26-Apr-27 | 4.00 | A | 4.37 | 4.28 | 4.37 | 0.05 | 4.37 |
| Dexus Finance | 11-May-27 | 4.25 | A3 | 4.26 | 4.19 | 4.26 | 0.03 | 4.26 |
| Asciano | 12-May-27 | 5.40 | BBB- | 5.41 | 5.33 | 5.41 | 0.05 | 0.53 |
| Fonterra | 2-Nov-27 | 4.00 | A- | 4.28 | 4.22 | 4.28 | 0.02 | 0.55 |
| Macquarie | 15-Dec-27 | 4.15 | BBB+ | 4.94 | 4.87 | 4.94 | 0.05 | 0.73 |
| AusNet | 21-Aug-28 | 4.20 | A- | 4.85 | 4.76 | 4.85 | 0.04 | 0.65 |