Summary: Corporate bond spreads a touch wider on average; swap spreads markedly wider; iTraxx up 4.00 points; local issuance picks up, still at below-average level; one RMBS transaction; volumes remain lacklustre in kangaroo primary market.
Corporate yields generally tracked their Commonwealth Government counterparts and the median spread finished the week about 1bp wider. The majority of spreads’ week-on-week changes at the individual level were within a range of -1bp to +4bps. There no particularly notable exceptions.
One of the two other measures of corporate risk, swap-to-bond spreads, widened markedly. 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 78.50 points.
Volumes in the primary market for corporate bonds and notes picked up a little, albeit to a below-average level. $800 million worth of bonds or notes were priced by local entities or their subsidiaries, whereas in the previous week there was zero issuance. Asset-backed transactions accounted for $350 million of the $800 million.
The only deals which were priced during the week took place on Thursday. Newcastle Permanent issued $250 million of February 2027 FRNs at BBSW + 100bps, 37bps above a similar 5-year issue in February 2021. At about the same time, the Bank of China’s Sydney branch pried $200 million worth of February 2025s at BBSW + 60bps, 3bps higher than a similar 3-year issue in April 2021.
There was one primary market transaction for asset-backed securities during the week. Liberty Financial raised $350 million for its 2022-1 Auto Trust over seven tranches, with the $262.5 million Class A tranche priced at 1m BBSW + 85bps. The securities are backed by eligible automobile loans originated by Liberty Financial.
Volumes in the primary market for kangaroo bonds remained lacklustre and there was just the one transaction during the week. International Finance Corporation tapped its June 2029 line for $50 million at ACGB + 51bps.
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- | 0.16 | 0.13 | 0.16 | 0.01 | -0.01 |
| CBA | 30-Mar-22 | 3.25 | AA- | 0.14 | 0.12 | 0.14 | 0.01 | -0.04 |
| Optus | 17-Jun-22 | 4.00 | A | 0.44 | 0.40 | 0.44 | -0.03 | -0.03 |
| GE Capital | 8-Aug-22 | 5.50 | BBB+ | 0.52 | 0.46 | 0.46 | -0.07 | -0.04 |
| Optus | 23-Aug-22 | 3.25 | A | 0.53 | 0.52 | 0.53 | -0.09 | 0.02 |
| Apple Inc | 28-Aug-22 | 3.70 | AA+ | 0.40 | 0.32 | 0.36 | -0.05 | 0.03 |
| Wells Fargo | 7-Sep-22 | 5.25 | A- | 0.58 | 0.50 | 0.51 | -0.08 | 0.01 |
| Melbourne Airport | 15-Sep-22 | 4.00 | BBB+ | 0.56 | 0.54 | 0.54 | -0.07 | -0.03 |
| Telstra | 16-Sep-22 | 4.00 | A | 0.49 | 0.46 | 0.46 | -0.07 | 0.00 |
| Stockland | 23-Nov-22 | 4.50 | A- | 0.55 | 0.51 | 0.55 | -0.10 | 0.04 |
| ANZ | 16-Aug-23 | 5.00 | AA- | 1.07 | 0.99 | 1.07 | -0.02 | 0.15 |
| Transpower NZ | 28-Aug-23 | 5.75 | AA- | 1.06 | 1.04 | n/a | n/a | n/a |
| Mirvac Finance | 18-Sep-23 | 3.50 | BBB+ | 1.31 | 1.29 | 1.31 | -0.08 | 0.19 |
| Qantas | 10-Oct-23 | 4.40 | BB+ | 2.07 | 2.02 | 2.07 | -0.03 | 0.20 |
| Australia Post | 13-Nov-23 | 5.50 | A+ | 1.32 | 1.25 | 1.32 | -0.01 | 0.21 |
| Westpac | 21-Nov-23 | 4.40 | AA- | 1.26 | 1.16 | 1.26 | 0.00 | 0.19 |
| Fonterra | 26-Feb-24 | 5.50 | A- | 1.45 | 1.39 | 1.45 | -0.01 | 0.24 |
| NAB | 11-Mar-24 | 5.00 | AA- | 1.44 | 1.35 | 1.44 | -0.01 | 0.23 |
| Rabobank Nederland (Aust) | 11-Apr-24 | 5.50 | A+ | 1.64 | 1.53 | 1.64 | 0.02 | 0.24 |
| CBA | 27-May-24 | 4.75 | AA- | 1.58 | 1.50 | 1.58 | -0.01 | 0.28 |
| AusNet | 21-Jun-24 | 4.00 | BBB+ | 2.01 | 1.95 | 2.01 | -0.01 | 0.24 |
| Macquarie Bank | 7-Aug-24 | 1.75 | A+ | 1.93 | 1.84 | 1.93 | 0.00 | 0.26 |
| Wells Fargo | 27-Aug-24 | 4.75 | A+ | 1.98 | 1.89 | 1.98 | 0.01 | 0.24 |
| University of Sydney | 28-Aug-25 | 3.75 | Aa1 | 2.15 | 2.03 | 2.15 | 0.02 | 0.32 |
| Apple Inc | 10-Jun-26 | 3.60 | AA+ | 2.21 | 2.09 | 2.21 | 0.02 | 0.32 |
| CBA | 11-Jun-26 | 4.20 | AA- | 2.27 | 2.21 | 2.27 | -0.03 | 0.34 |
| ANZ | 22-Jul-26 | 4.00 | AA- | 2.30 | 2.22 | 2.30 | -0.01 | 0.35 |
| Qantas | 12-Oct-26 | 4.75 | BB+ | 3.32 | 3.20 | 3.32 | 0.03 | 0.36 |
| Australia Pacific Airports | 4-Nov-26 | 3.75 | BBB+ | 2.82 | 2.73 | 2.82 | 0.00 | 0.28 |
| CBA | 17-Nov-26 | 3.25 | AA- | 2.11 | 2.06 | 2.11 | -0.05 | 0.18 |
| Australia Post | 1-Dec-26 | 4.00 | A+ | 2.34 | 2.23 | 2.34 | 0.02 | 0.32 |
| WSO Finance | 31-Mar-27 | 4.50 | A- | 2.65 | 2.54 | 2.65 | 0.01 | 0.31 |
| Telstra | 19-Apr-27 | 4.00 | A | 2.50 | 2.43 | 2.50 | -0.02 | 0.29 |
| Asciano | 12-May-27 | 5.40 | BBB- | 3.67 | 3.57 | 3.67 | 0.01 | 0.27 |
| Fonterra | 2-Nov-27 | 4.00 | A- | 2.60 | 2.51 | 2.60 | 0.01 | 0.33 |
| Macquarie | 15-Dec-27 | 4.15 | BBB+ | 3.18 | 3.07 | 3.18 | 0.03 | 0.35 |
| AusNet | 21-Aug-28 | 4.20 | A- | 2.91 | 2.82 | 2.91 | 0.03 | 0.32 |