Summary: Corporate bond spreads 3bps wider on average; swap spreads tighter; iTraxx up 1.5 points; local issuance rises significantly; one RMBS transaction; no primary-market kangaroo deals.
Corporate yields generally outpaced the rises of their Commonwealth Government counterparts, resulting in a 3bps rise 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 -5bps to +4bps. The most notable exception was Macquarie August 2024s (spread: 90bps, +8bps).
One of the two other main measures of corporate risk, swap-to-bond spreads, tightened all along the curve. The other measure, credit default swap premiums, rose a little on average. The Australian credit default swap index, the iTraxx Australia Series 36, finished 1.50 points higher at 82.50 points.
Volumes in the primary market for corporate bonds and notes rose significantly on the back of a couple of large deals. $6.1 billion worth of bonds or notes were priced by local entities or their subsidiaries, whereas in the previous week issuance amounted to $3.7 billion. Asset-backed transactions accounted for $500 million of the $3.7 billion.
The primary market was quiet until midweek. Commonwealth Bank then raised $1.1 billion over two tranches of April 2032 Tier 2 securities, with one fixed-rate tranche and the other a floating-rate tranche. The $800 million floating-rate tranche and the $400 million fixed-rate tranche were priced at BBSW/Swap + 190bps and both are callable in April 2027.
Later that day, Fortescue raised USD$1.5 billion (AUD$2.0 billion), also over two tranches. The USD$700 million tranche of April 2030s was priced at Treasury + 324bps and the USD$800 million tranche of April 2032s was priced at Treasury + 353bps.
Volkswagen Financial Services (Australia) issued $250 million worth of April 2025s at Swap + 128bps the next day. In late March 2021, a similar 3-year deal by VWFS was priced at Swap + 90bps.
Oversea-Chinese Banking Corporation’s Sydney branch also issued 3-year bonds except they were FRNs. $700 million worth of April 2025 FRNs were priced at 3m BBSW + 70bps, 29bps more than the previous 3-year deal in August 2021.
There were two bond sales at the end of the week. South32 raised $700 million with an issue of April 2032s and NBN Co. raised $800 million via an issue of April 2027s at Swap + 123bps.
There was one primary market transaction for asset-backed securities during the week.
Thinktank raised $500 million for its Residential 2022-1 trust over nine tranches on Wednesday. The Class A1 securities were split into two tranches; the $100 million Class A1-S tranche was priced at 1m BBSW + 65bps and the $300 million Class A1-L tranche was priced at 1m BBSW + 135bps.
There were no transactions in the primary market for kangaroo bonds.
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In ratings news, S&P placed Crown Resorts’ BBB rating on CreditWatch Negative in response to Blackstone’s proposed funding mix for its takeover.
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 | 0.78 | 0.63 | 0.78 | 0.13 | 0.27 |
| GE Capital | 8-Aug-22 | 5.50 | BBB+ | 0.93 | 0.85 | 0.93 | 0.08 | 0.38 |
| Optus | 23-Aug-22 | 3.25 | A | 0.98 | 0.81 | 0.98 | 0.15 | 0.40 |
| Apple Inc | 28-Aug-22 | 3.70 | AA+ | 0.76 | 0.69 | 0.76 | 0.09 | 0.32 |
| Wells Fargo | 7-Sep-22 | 5.25 | A- | 1.17 | 1.09 | 1.17 | 0.08 | 0.49 |
| Melbourne Airport | 15-Sep-22 | 4.00 | BBB+ | 1.08 | 0.92 | 1.08 | 0.19 | 0.45 |
| Telstra | 16-Sep-22 | 4.00 | A | 1.09 | 0.94 | 1.09 | 0.16 | 0.52 |
| Stockland | 23-Nov-22 | 4.50 | A- | 1.19 | 1.00 | 1.19 | 0.20 | 0.53 |
| ANZ | 16-Aug-23 | 5.00 | AA- | 2.28 | 2.02 | 2.28 | 0.27 | 1.06 |
| Transpower NZ | 28-Aug-23 | 5.75 | AA- | 2.22 | 1.95 | 2.22 | 0.23 | 1.01 |
| Mirvac Finance | 18-Sep-23 | 3.50 | BBB+ | 2.56 | 2.25 | 2.56 | 0.25 | 1.06 |
| Qantas | 10-Oct-23 | 4.40 | BB+ | 3.36 | 3.13 | 3.35 | 0.24 | 1.06 |
| Australia Post | 13-Nov-23 | 5.50 | A+ | 2.53 | 2.19 | 2.50 | 0.31 | 1.04 |
| Westpac | 21-Nov-23 | 4.40 | AA- | 2.58 | 2.29 | 2.56 | 0.29 | 1.12 |
| Fonterra | 26-Feb-24 | 5.50 | A- | 2.87 | 2.60 | 2.87 | 0.29 | 1.17 |
| NAB | 11-Mar-24 | 5.00 | AA- | 2.84 | 2.57 | 2.82 | 0.25 | 1.15 |
| Rabobank Nederland (Aust) | 11-Apr-24 | 5.50 | A+ | 2.95 | 2.69 | 2.95 | 0.27 | 1.12 |
| CBA | 27-May-24 | 4.75 | AA- | 2.93 | 2.65 | 2.89 | 0.26 | 1.06 |
| AusNet | 21-Jun-24 | 4.00 | BBB+ | 3.56 | 3.28 | 3.55 | 0.28 | 1.16 |
| Macquarie Bank | 7-Aug-24 | 1.75 | A+ | 3.29 | 3.02 | 3.25 | 0.24 | 1.06 |
| Wells Fargo | 27-Aug-24 | 4.75 | A+ | 3.51 | 3.27 | 3.49 | 0.24 | 1.24 |
| University of Sydney | 28-Aug-25 | 3.75 | Aa1 | 3.47 | 3.29 | 3.43 | 0.12 | 1.03 |
| Apple Inc | 10-Jun-26 | 3.60 | AA+ | 3.40 | 3.25 | 3.39 | 0.13 | 0.97 |
| CBA | 11-Jun-26 | 4.20 | AA- | 3.62 | 3.45 | 3.59 | 0.10 | 1.07 |
| ANZ | 22-Jul-26 | 4.00 | AA- | 3.66 | 3.49 | 3.63 | 0.11 | 1.10 |
| Qantas | 12-Oct-26 | 4.75 | BB+ | 4.79 | 4.61 | 4.77 | 0.15 | 1.15 |
| Australia Pacific Airports | 4-Nov-26 | 3.75 | BBB+ | 4.22 | 4.04 | 4.20 | 0.15 | 1.09 |
| CBA | 17-Nov-26 | 3.25 | AA- | 3.53 | 3.36 | 3.53 | 0.17 | 1.20 |
| Australia Post | 1-Dec-26 | 4.00 | A+ | 3.58 | 3.42 | 3.55 | 0.11 | 1.00 |
| WSO Finance | 31-Mar-27 | 4.50 | A- | 4.03 | 3.86 | 4.02 | 0.12 | 1.03 |
| Telstra | 19-Apr-27 | 4.00 | A | 3.89 | 3.72 | 3.87 | 0.14 | 1.05 |
| Asciano | 12-May-27 | 5.40 | BBB- | 4.18 | 4.00 | 4.18 | 0.19 | 4.18 |
| Fonterra | 2-Nov-27 | 4.00 | A- | 3.99 | 3.81 | 3.99 | 0.19 | 3.99 |
| Macquarie | 15-Dec-27 | 4.15 | BBB+ | 5.13 | 4.96 | 5.12 | 0.14 | 1.03 |
| AusNet | 21-Aug-28 | 4.20 | A- | 4.03 | 3.83 | 4.03 | 0.18 | 1.05 |
| 4.53 | 4.37 | 4.52 | 0.13 | 1.07 | ||||
| 4.50 | 4.36 | 4.49 | 0.13 | 1.15 |