Summary: Corporate bond spreads 10bps wider on average; swap spreads wider except at short end; iTraxx up 3 points; local issuance falls back substantially; one RMBS transaction; three primary-market kangaroo deals.
Corporate yields again generally outpaced the rises of their Commonwealth Government counterparts, resulting in a 10bps increase 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 zero to +10bps. The more-notable exceptions pretty much all came from bonds with maturities in late 2022 through to mid-2024.
One of the two other main measures of corporate risk, swap-to-bond spreads, remained fairly stable at the short end but widened farther out along the curve. The other measure, credit default swap premiums, rose modestly on average. The Australian credit default swap index, the iTraxx Australia Series 36, finished 3.00 points higher at 84.50 points.
Volumes in the primary market for corporate bonds and notes fell back substantially. $1.4 billion worth of bonds or notes were priced by local entities or their subsidiaries, whereas in the previous week issuance amounted to $7.0 billion. Asset-backed transactions accounted for $0.5 billion of the $1.4 billion.
At the start of the week, NAB issued HKD$500 million (AUD$85 million) worth of March 2027s. It then issued USD$50 million (AUD$65 million) worth of October 2023s on Wednesday night.
National Housing Finance & Investment Corporation tapped its June 2032s for $133 million at ACGB + 35bps a little earlier that day.
On Thursday, Rabobank (Australia) tapped its April 2024 FRNs at BBSW + 54bps for $120 million. In April 2021, the FRNs were priced at BBSW + 35bps.
At the end of the week, AusNet Services priced $500 million worth of March 2028s at Swap + 147bps.
There was one primary market transaction for asset-backed securities during the week.
Pepper raised $500 million for its Pepper Residential Securities 2022-1 Trust over ten tranches. The Class A1 securities were split into two tranches; the $100 million Class A1-s tranche was priced at 1m BBSW + 65bps and the $200 million Class A1-a tranche was priced at 1m BBSW + 130bps. The securities are backed by prime and non-conforming borrowers secured by first ranking mortgages.
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There were three deals in the primary market for kangaroo bonds.
Oesterreichische Kontrollbank issued $60 million of September 2032s at ACGB + 62bps on Tuesday.
The same day, the Inter-American Development Bank raised $300 million via an issue of January 2026 at ACGB + 48bps.
At the end of the week, about the same time, Rentenbank priced $75 million worth of October 2032s at ACGB + 61bps.
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In ratings news, Moody’s revised the outlook for BlueScope Steel from “stable” to “positive”.
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 |
|---|---|---|---|---|---|---|---|---|
| CBA | 30-Mar-22 | 3.25 | AA- | 0.29 | 0.26 | 0.29 | 0.03 | 0.15 |
| Optus | 17-Jun-22 | 4.00 | A | 0.67 | 0.61 | 0.66 | 0.05 | 0.23 |
| GE Capital | 8-Aug-22 | 5.50 | BBB+ | 0.85 | 0.74 | 0.85 | 0.11 | 0.31 |
| Optus | 23-Aug-22 | 3.25 | A | 0.85 | 0.75 | 0.85 | 0.09 | 0.28 |
| Apple Inc | 28-Aug-22 | 3.70 | AA+ | 0.68 | 0.60 | 0.68 | 0.08 | 0.25 |
| Wells Fargo | 7-Sep-22 | 5.25 | A- | 1.15 | 1.05 | 1.15 | 0.10 | 0.52 |
| Melbourne Airport | 15-Sep-22 | 4.00 | BBB+ | 0.95 | 0.83 | 0.86 | 0.02 | 0.25 |
| Telstra | 16-Sep-22 | 4.00 | A | 0.90 | 0.82 | 0.90 | 0.09 | 0.38 |
| Stockland | 23-Nov-22 | 4.50 | A- | 1.21 | 0.94 | 1.21 | 0.24 | 0.62 |
| ANZ | 16-Aug-23 | 5.00 | AA- | 1.89 | 1.67 | 1.89 | 0.24 | 0.64 |
| Transpower NZ | 28-Aug-23 | 5.75 | AA- | 1.86 | 1.64 | 1.86 | 0.24 | 0.57 |
| Mirvac Finance | 18-Sep-23 | 3.50 | BBB+ | 2.18 | 1.94 | 2.18 | 0.26 | 0.58 |
| Qantas | 10-Oct-23 | 4.40 | BB+ | 3.02 | 2.77 | 3.02 | 0.28 | 0.72 |
| Australia Post | 13-Nov-23 | 5.50 | A+ | 2.13 | 1.83 | 2.13 | 0.31 | 0.61 |
| Westpac | 21-Nov-23 | 4.40 | AA- | 2.16 | 1.91 | 2.16 | 0.26 | 0.69 |
| Fonterra | 26-Feb-24 | 5.50 | A- | 2.45 | 2.18 | 2.45 | 0.29 | 0.74 |
| NAB | 11-Mar-24 | 5.00 | AA- | 2.44 | 2.19 | 2.44 | 0.26 | 0.75 |
| Rabobank Nederland (Aust) | 11-Apr-24 | 5.50 | A+ | 2.56 | 2.28 | 2.56 | 0.29 | 0.69 |
| CBA | 27-May-24 | 4.75 | AA- | 2.51 | 2.26 | 2.51 | 0.27 | 0.68 |
| AusNet | 21-Jun-24 | 4.00 | BBB+ | 3.16 | 2.86 | 3.16 | 0.29 | 0.88 |
| Macquarie Bank | 7-Aug-24 | 1.75 | A+ | 2.93 | 2.69 | 2.93 | 0.25 | 0.76 |
| Wells Fargo | 27-Aug-24 | 4.75 | A+ | 3.13 | 2.85 | 3.13 | 0.31 | 0.86 |
| University of Sydney | 28-Aug-25 | 3.75 | Aa1 | 3.17 | 2.87 | 3.17 | 0.33 | 0.73 |
| Apple Inc | 10-Jun-26 | 3.60 | AA+ | 3.18 | 2.92 | 3.18 | 0.28 | 0.68 |
| CBA | 11-Jun-26 | 4.20 | AA- | 3.36 | 3.12 | 3.36 | 0.27 | 0.79 |
| ANZ | 22-Jul-26 | 4.00 | AA- | 3.38 | 3.13 | 3.38 | 0.26 | 0.79 |
| Qantas | 12-Oct-26 | 4.75 | BB+ | 4.50 | 4.22 | 4.50 | 0.31 | 0.89 |
| Australia Pacific Airports | 4-Nov-26 | 3.75 | BBB+ | 3.91 | 3.64 | 3.91 | 0.29 | 0.77 |
| CBA | 17-Nov-26 | 3.25 | AA- | 3.21 | 2.96 | 3.21 | 0.27 | 0.76 |
| Australia Post | 1-Dec-26 | 4.00 | A+ | 3.32 | 3.03 | 3.32 | 0.30 | 0.66 |
| WSO Finance | 31-Mar-27 | 4.50 | A- | 3.79 | 3.50 | 3.79 | 0.30 | 0.82 |
| Telstra | 19-Apr-27 | 4.00 | A | 3.61 | 3.34 | 3.61 | 0.29 | 0.76 |
| Asciano | 12-May-27 | 5.40 | BBB- | 4.88 | 4.59 | 4.88 | 0.29 | 0.83 |
| Fonterra | 2-Nov-27 | 4.00 | A- | 3.73 | 3.48 | 3.73 | 0.26 | 0.78 |
| Macquarie | 15-Dec-27 | 4.15 | BBB+ | 4.21 | 3.96 | 4.21 | 0.27 | 0.73 |
| AusNet | 21-Aug-28 | 4.20 | A- | 4.20 | 3.87 | 4.20 | 0.36 | 0.84 |