Summary: Corporate bond spreads 5bps tighter on average; swap spreads tighter; iTraxx up 4.8 points; local issuance falls back from elevated volumes; no RMBS transactions; volumes fall back in kangaroo primary market.
Corporate yields generally lagged the rises of their Commonwealth Government counterparts and the median spread finished the week 5bps wider. The majority of spreads’ week-on-week changes at the individual level were within a range of -3bps to +5bps. There no particularly notable exceptions.
One of the two other measures of corporate risk, swap-to-bond spreads, tightened along the curve.
The other measure, credit default swap premiums, increased on average. The Australian credit default swap index, the iTraxx Australia Series 36, finished 4.8 points higher at 72.80 points.
Volumes in the primary market for corporate bonds and notes fell back this week from the elevated level of the previous week. $4.7 billion worth of bonds or notes were priced by local entities or their subsidiaries, whereas in the previous week issuance amounted to $7.9 billion. There were no asset-backed transactions.
Suncorp-Metway kicked off the week with a $1 billion issue of fixed and floating January 2027 bonds on Monday. The $775 million tranche of FRNs were priced at BBSW + 78bps while the $225 million fixed-rate tranche was priced at Swap + 78bps.
Westpac priced $1.9 billion worth of January 2027 FRNs and $850 million worth of fixed-rate bonds at BBSW/Swap + 70bps the next day. In May 2019, Westpac priced similar 5-year fixed and floating bonds at BBSW + 88bps.
Midweek, Rabobank (Australia) kept to the predominantly FRN-theme of the week when it priced $700 million of January 2027 FRNs at BBSW + 73bps.
On Thursday, the Bank of Queensland tapped it existing May 2026 FRN line for $250 million at BBSW + 85bps. BoQ initially issued this line in April 2021 at BBSW + 63bps.
Later that night, Nufarm priced USD$350 million (AUD$490 million) worth of January 2030 bonds at Treasury + 322bps. Nufarm senior debt is rated BB- by S&P.
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There were no primary market transactions for asset-backed securities during the week.
Volumes subsided somewhat in the primary market for kangaroo bonds after a couple of weeks of elevated issuance, with $0.6 billion worth of transactions for the week.
Early in the week, Nederlandse Waterschapsbank issued a new line of July 2032s at ACGB + 60bps, raising $150 million.
A day later, Nordic Investment Bank tapped an existing line of February 2024s for $125 million at ACGB + 34bps, 5bps more than in November.
At the end of the week, KfW Bankengruppe raised $300 million via a new line of February 2027s at ACGB + 42bps.
Interested readers can find more details as well as other bond transactions in our tables via the link below.
AUSTRALIAN CORPORATE BONDS
| ISSUER | MATURITY | COUPON (%) | RATING | WEEK HIGH | WEEK LOW | CLOSING YIELD | Δ WEEK | Δ MONTH |
|---|---|---|---|---|---|---|---|---|
| NAB | 24-Mar-22 | 3.25 | AA- | 0.17 | 0.15 | 0.15 | -0.02 | -0.01 |
| CBA | 30-Mar-22 | 3.25 | AA- | 0.17 | 0.14 | 0.14 | -0.02 | -0.04 |
| Optus | 17-Jun-22 | 4.00 | A | 0.54 | 0.46 | 0.52 | 0.06 | 0.06 |
| GE Capital | 8-Aug-22 | 5.50 | BBB+ | 0.51 | 0.51 | 0.51 | 0.02 | 0.02 |
| Optus | 23-Aug-22 | 3.25 | A | 0.69 | 0.54 | 0.65 | 0.14 | 0.14 |
| Apple Inc | 28-Aug-22 | 3.70 | AA+ | 0.41 | 0.38 | 0.40 | 0.00 | 0.06 |
| Wells Fargo | 7-Sep-22 | 5.25 | A- | 0.57 | 0.55 | 0.55 | 0.01 | 0.05 |
| Melbourne Airport | 15-Sep-22 | 4.00 | BBB+ | 0.64 | 0.56 | 0.63 | 0.06 | 0.06 |
| Telstra | 16-Sep-22 | 4.00 | A | 0.62 | 0.52 | 0.59 | 0.08 | 0.13 |
| Stockland | 23-Nov-22 | 4.50 | A- | 0.69 | 0.52 | 0.65 | 0.14 | 0.14 |
| ANZ | 16-Aug-23 | 5.00 | AA- | 1.08 | 0.96 | 1.03 | 0.09 | 0.11 |
| Transpower NZ | 28-Aug-23 | 5.75 | AA- | 1.12 | 0.88 | 1.06 | 0.17 | 0.17 |
| Mirvac Finance | 18-Sep-23 | 3.50 | BBB+ | 1.40 | 1.12 | 1.34 | 0.22 | 0.22 |
| Qantas | 10-Oct-23 | 4.40 | BB+ | 2.06 | 1.90 | 2.02 | 0.10 | 0.14 |
| Australia Post | 13-Nov-23 | 5.50 | A+ | 1.30 | 1.13 | 1.26 | 0.09 | 0.16 |
| Westpac | 21-Nov-23 | 4.40 | AA- | 1.24 | 1.12 | 1.19 | 0.08 | 0.12 |
| Fonterra | 26-Feb-24 | 5.50 | A- | 1.42 | 1.25 | 1.36 | 0.09 | 0.16 |
| NAB | 11-Mar-24 | 5.00 | AA- | 1.43 | 1.26 | 1.37 | 0.11 | 0.17 |
| Rabobank Nederland (Aust) | 11-Apr-24 | 5.50 | A+ | 1.63 | 1.45 | 1.56 | 0.08 | 0.16 |
| CBA | 27-May-24 | 4.75 | AA- | 1.55 | 1.45 | 1.50 | 0.10 | 0.20 |
| AusNet | 21-Jun-24 | 4.00 | BBB+ | 1.97 | 1.80 | 1.92 | 0.09 | 0.15 |
| Macquarie Bank | 7-Aug-24 | 1.75 | A+ | 1.89 | 1.79 | 1.84 | 0.10 | 0.18 |
| Wells Fargo | 27-Aug-24 | 4.75 | A+ | 1.96 | 1.74 | 1.90 | 0.11 | 0.16 |
| University of Sydney | 28-Aug-25 | 3.75 | Aa1 | 2.13 | 2.01 | 2.06 | 0.11 | 0.22 |
| Apple Inc | 10-Jun-26 | 3.60 | AA+ | 2.17 | 1.98 | 2.10 | 0.10 | 0.21 |
| CBA | 11-Jun-26 | 4.20 | AA- | 2.30 | 2.02 | 2.23 | 0.15 | 0.30 |
| ANZ | 22-Jul-26 | 4.00 | AA- | 2.31 | 2.05 | 2.24 | 0.14 | 0.29 |
| Qantas | 12-Oct-26 | 4.75 | BB+ | 3.26 | 3.06 | 3.19 | 0.10 | 0.23 |
| Australia Pacific Airports | 4-Nov-26 | 3.75 | BBB+ | 2.82 | 2.59 | 2.75 | 0.13 | 0.20 |
| CBA | 17-Nov-26 | 3.25 | AA- | 2.18 | 1.91 | 2.10 | 0.17 | 0.17 |
| Australia Post | 1-Dec-26 | 4.00 | A+ | 2.31 | 2.11 | 2.25 | 0.11 | 0.23 |
| WSO Finance | 31-Mar-27 | 4.50 | A- | 2.62 | 2.41 | 2.55 | 0.10 | 0.22 |
| Telstra | 19-Apr-27 | 4.00 | A | 2.53 | 2.30 | 2.46 | 0.13 | 0.25 |
| Asciano | 12-May-27 | 5.40 | BBB- | 3.65 | 3.45 | 3.58 | 0.11 | 0.18 |
| Fonterra | 2-Nov-27 | 4.00 | A- | 2.60 | 2.37 | 2.53 | 0.12 | 0.26 |
| Macquarie | 15-Dec-27 | 4.15 | BBB+ | 3.13 | 2.95 | 3.09 | 0.10 | 0.26 |
| AusNet | 21-Aug-28 | 4.20 | A- | 2.90 | 2.69 | 2.84 | 0.10 | 0.24 |