Summary: Corporate bond spreads tighter on average; swap spreads tighten somewhat; iTraxx up 4.00 points; local issuance picks up; two RMBS transactions; volumes rebound in kangaroo market.
Corporate yields somewhat lagged the outsized increases of their Commonwealth Government counterparts and the median spread finished the week about 4bps tighter. The majority of spreads’ week-on-week changes at the individual level were within a range of -4bp to +6bps. There no especially notable exceptions.
One of the two other measures of corporate risk, swap-to-bond spreads, tightened somewhat. The other measure, credit default swap premiums, again increased on average. The Australian credit default swap index, the iTraxx Australia Series 36, finished 4.00 points higher at 82.50 points.
Volumes in the primary market for corporate bonds and notes picked up. $1.9 billion worth of bonds or notes were priced by local entities or their subsidiaries, whereas in the previous week issuance amounted to $800 million. Asset-backed transactions accounted for $950 million of the $1.9 billion.
Auswide Bank opened the week with a small deal on Monday. $30 million worth of February 2025 FRNs were priced at BBSW + 75bps. A similar Auswide deal in October 2021 was priced at BBSW + 60bps.
The next day, Mizuho Bank’s Sydney branch priced $900 million of February 2025 FRNs at 3m BBSW + 54bps. In February 2019, Mizuho Sydney priced 3 year FRNs at 3 month BBSW + 91bps.
At the end of the week, Rabobank (Australia) raised $125 million at Swap + 20bps via an issue of February 2023s
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There were two primary market transactions for asset-backed securities during the week.
AFG raised $450 million for its 2022-1 Trust over nine tranches, with the Class A securities split into two tranches. The $100 million Class A1-S tranche was priced at 1m BBSW + 60bps and the $237.5 million Class A1-L tranche was priced at 1m BBSW + 105bps. The tranches are backed by non-conforming Australian residential mortgages.
Metro Finance raised $500 million for its 2022-1 Trust over seven tranches on the same day. The $434 million Class A1-L tranche was priced at 1m BBSW + 95bps. The tranches are backed by prime automobile & equipment loans.
Volumes in the primary market for kangaroo bonds rebounded with four transactions during the week.
KfW Bankengruppe kicked off the week’s deals on Wednesday with a $400 million tap of its September 2026 line at ACGB + 41bps.
The next day, IDB Invest returned from a six-month absence to issue $300 million of February 2027s at ACGB + 59bps. The African Development Bank also tapped its January 2025s for $60 million at ACGB + 25bps on the same day.
At the end of the week, Landeskreditbank tapped its September 2026s for $50 million at ACGB + 53bps.
In rating news, S&P downgraded AusNet Services from A- to BBB+ following AusNet’s purchase by Brookfield. S&P also revised the outlook of Genworth Australia from negative to stable.
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- | 0.15 | 0.13 | 0.15 | 0.00 | -0.01 |
| CBA | 30-Mar-22 | 3.25 | AA- | 0.14 | 0.12 | 0.14 | 0.00 | -0.03 |
| Optus | 17-Jun-22 | 4.00 | A | 0.49 | 0.45 | 0.48 | 0.04 | 0.01 |
| GE Capital | 8-Aug-22 | 5.50 | BBB+ | 0.53 | 0.49 | 0.53 | 0.07 | 0.02 |
| Optus | 23-Aug-22 | 3.25 | A | 0.64 | 0.58 | 0.64 | 0.11 | 0.09 |
| Apple Inc | 28-Aug-22 | 3.70 | AA+ | 0.42 | 0.36 | 0.42 | 0.06 | 0.03 |
| Wells Fargo | 7-Sep-22 | 5.25 | A- | 0.60 | 0.53 | 0.60 | 0.09 | 0.04 |
| Melbourne Airport | 15-Sep-22 | 4.00 | BBB+ | 0.60 | 0.55 | 0.60 | 0.06 | 0.03 |
| Telstra | 16-Sep-22 | 4.00 | A | 0.57 | 0.50 | 0.57 | 0.11 | 0.05 |
| Stockland | 23-Nov-22 | 4.50 | A- | 0.70 | 0.58 | 0.62 | 0.06 | 0.09 |
| ANZ | 16-Aug-23 | 5.00 | AA- | 1.30 | 1.12 | 1.30 | 0.23 | 0.32 |
| Transpower NZ | 28-Aug-23 | 5.75 | AA- | 1.27 | 1.19 | 1.27 | n/a | 0.38 |
| Mirvac Finance | 18-Sep-23 | 3.50 | BBB+ | 1.57 | 1.44 | 1.57 | 0.26 | 0.44 |
| Qantas | 10-Oct-23 | 4.40 | BB+ | 2.32 | 2.15 | 2.32 | 0.25 | 0.39 |
| Australia Post | 13-Nov-23 | 5.50 | A+ | 1.56 | 1.38 | 1.56 | 0.25 | 0.41 |
| Westpac | 21-Nov-23 | 4.40 | AA- | 1.52 | 1.32 | 1.52 | 0.25 | 0.38 |
| Fonterra | 26-Feb-24 | 5.50 | A- | 1.74 | 1.53 | 1.74 | 0.29 | 0.47 |
| NAB | 11-Mar-24 | 5.00 | AA- | 1.73 | 1.51 | 1.73 | 0.29 | 0.44 |
| Rabobank Nederland (Aust) | 11-Apr-24 | 5.50 | A+ | 1.90 | 1.70 | 1.90 | 0.26 | 0.44 |
| CBA | 27-May-24 | 4.75 | AA- | 1.88 | 1.66 | 1.88 | 0.29 | 0.38 |
| AusNet | 21-Jun-24 | 4.00 | BBB+ | 2.30 | 2.09 | 2.30 | 0.29 | 0.47 |
| Macquarie Bank | 7-Aug-24 | 1.75 | A+ | 2.23 | 2.01 | 2.23 | 0.30 | 0.39 |
| Wells Fargo | 27-Aug-24 | 4.75 | A+ | 2.27 | 2.05 | 2.27 | 0.29 | 0.51 |
| University of Sydney | 28-Aug-25 | 3.75 | Aa1 | 2.46 | 2.23 | 2.46 | 0.31 | 0.41 |
| Apple Inc | 10-Jun-26 | 3.60 | AA+ | 2.50 | 2.27 | 2.50 | 0.29 | 0.50 |
| CBA | 11-Jun-26 | 4.20 | AA- | 2.58 | 2.36 | 2.58 | 0.31 | 0.54 |
| ANZ | 22-Jul-26 | 4.00 | AA- | 2.59 | 2.38 | 2.59 | 0.29 | 0.52 |
| Qantas | 12-Oct-26 | 4.75 | BB+ | 3.61 | 3.36 | 3.61 | 0.29 | 0.53 |
| Australia Pacific Airports | 4-Nov-26 | 3.75 | BBB+ | 3.11 | 2.89 | 3.11 | 0.29 | 0.50 |
| CBA | 17-Nov-26 | 3.25 | AA- | 2.46 | 2.24 | 2.46 | 0.35 | 0.55 |
| Australia Post | 1-Dec-26 | 4.00 | A+ | 2.65 | 2.41 | 2.65 | 0.31 | 0.52 |
| WSO Finance | 31-Mar-27 | 4.50 | A- | 2.96 | 2.73 | 2.96 | 0.32 | 0.53 |
| Telstra | 19-Apr-27 | 4.00 | A | 2.83 | 2.59 | 2.83 | 0.33 | 0.51 |
| Asciano | 12-May-27 | 5.40 | BBB- | 4.00 | 3.73 | 4.00 | 0.33 | 0.53 |
| Fonterra | 2-Nov-27 | 4.00 | A- | 2.92 | 2.68 | 2.92 | 0.32 | 0.53 |
| Macquarie | 15-Dec-27 | 4.15 | BBB+ | 3.46 | 3.22 | 3.46 | 0.28 | 0.49 |
| AusNet | 21-Aug-28 | 4.20 | A- | 3.27 | 2.96 | 3.27 | 0.36 | 0.56 |