Summary: Corporate bond spreads unchanged on average; swap spreads tighten; iTraxx up 2.00 points; local issuance picks up substantially; two RMBS transactions; volumes surge in kangaroo market.
Corporate yields generally tracked the changes of their Commonwealth Government counterparts and the median spread finished the week unchanged. The majority of spreads’ week-on-week changes at the individual level were within a range of -4bp to +4bps. However, there were several notable exceptions; yields of Transpower NZ August 2023s (spread: 59bps, +7bps), Mirvac September 2023s (spread: 90bps, +8bps) and AusNet August 2028s (spread: 127bps, +7bps) all outpaced their benchmarks considerably.
One of the two other measures of corporate risk, swap-to-bond spreads, tightened. In contrast, the other measure, credit default swap premiums, again increased on average. The Australian credit default swap index, the iTraxx Australia Series 36, finished 2.00 points higher at 84.50 points.
Volumes in the primary market for corporate bonds and notes picked up substantially on the back of major bank deal. $8.0 billion worth of bonds or notes were priced by local entities or their subsidiaries, whereas in the previous week issuance amounted to $2 billion. Asset-backed transactions accounted for $1.7 billion of the $8.0 billion.
NAB’s $4 billion four tranche deal was the most notable of the week and pricing took place on Wednesday. The fixed and floating tranches which mature in February 2025 were priced at Swap/BBSW + 47bps while the fixed and floating tranches which mature in February 2027 were priced at Swap/BBSW + 72bps. NAB last priced domestic 5-year FRNs back in August 2021 at BBSW + 41bps but prior to that, a similar 5-year FRN was priced at BBSW + 77bps in January 2020.
There were only two deals for the week.
Macquarie Bank issued CHF200 million (AUD$300 million) worth of September 2029s at Mid-swap + 95bps on Tuesday night.
Two days later, Societe Generale’s Sydney branch raised $450 million via March 2027 FRNs priced at BBSW + 100bps.
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There were two primary market transactions for asset-backed securities during the week.
Midweek, Liberty Financial raised $1.1 billion for its PRIME Series 2022-1 Trust over nine tranches. The $968 million Class A1 was priced at 1m BBSW + 95bps.
Mortgage House raised $500 million for its RMBS 2022-1 Trust over ten tranches the next day. The Class A1 securities were split into two tranches: the $110 million Class A1-S tranche was priced at 1m BBSW + 55bps while the $324 million Class A1-L tranche was priced at 1m BBSW + 105bps.
Volumes in the primary market for kangaroo bonds fell back as two separate issuers raised a total of $1 billion. The Asian Development Bank tapped its March 2025 line for $350 million at ACGB + 53bps on Tuesday. A couple of days later, Nederlandse Waterschapsbank issued a new line of September 2025s to raise $650 million at ACGB + 61bps.
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 | 0.14 | 0.14 | -0.01 | -0.01 |
| CBA | 30-Mar-22 | 3.25 | AA- | 0.13 | 0.12 | 0.12 | -0.02 | -0.03 |
| Optus | 17-Jun-22 | 4.00 | A | 0.49 | 0.42 | 0.49 | 0.05 | 0.01 |
| GE Capital | 8-Aug-22 | 5.50 | BBB+ | 0.56 | 0.55 | 0.56 | 0.01 | 0.02 |
| Optus | 23-Aug-22 | 3.25 | A | 0.63 | 0.58 | 0.63 | 0.05 | 0.01 |
| Apple Inc | 28-Aug-22 | 3.70 | AA+ | 0.44 | 0.41 | 0.44 | 0.01 | 0.03 |
| Wells Fargo | 7-Sep-22 | 5.25 | A- | 0.64 | 0.61 | 0.62 | 0.00 | 0.04 |
| Melbourne Airport | 15-Sep-22 | 4.00 | BBB+ | 0.63 | 0.59 | 0.63 | 0.02 | 0.03 |
| Telstra | 16-Sep-22 | 4.00 | A | 0.55 | 0.51 | 0.55 | 0.03 | -0.01 |
| Stockland | 23-Nov-22 | 4.50 | A- | 0.69 | 0.57 | 0.69 | 0.10 | -0.04 |
| ANZ | 16-Aug-23 | 5.00 | AA- | 1.27 | 1.22 | 1.25 | 0.00 | 0.18 |
| Transpower NZ | 28-Aug-23 | 5.75 | AA- | 1.29 | 1.24 | 1.29 | 0.00 | 0.17 |
| Mirvac Finance | 18-Sep-23 | 3.50 | BBB+ | 1.58 | 1.52 | 1.57 | -0.03 | 0.21 |
| Qantas | 10-Oct-23 | 4.40 | BB+ | 2.29 | 2.23 | 2.28 | -0.01 | 0.20 |
| Australia Post | 13-Nov-23 | 5.50 | A+ | 1.52 | 1.47 | 1.51 | -0.01 | 0.21 |
| Westpac | 21-Nov-23 | 4.40 | AA- | 1.48 | 1.43 | 1.47 | 0.00 | 0.23 |
| Fonterra | 26-Feb-24 | 5.50 | A- | 1.73 | 1.68 | 1.73 | 0.03 | 0.32 |
| NAB | 11-Mar-24 | 5.00 | AA- | 1.71 | 1.67 | 1.71 | 0.02 | 0.30 |
| Rabobank Nederland (Aust) | 11-Apr-24 | 5.50 | A+ | 1.89 | 1.85 | 1.89 | 0.03 | 0.29 |
| CBA | 27-May-24 | 4.75 | AA- | 1.85 | 1.81 | 1.84 | 0.01 | 0.32 |
| AusNet | 21-Jun-24 | 4.00 | BBB+ | 2.39 | 2.26 | 2.39 | 0.11 | 0.40 |
| Macquarie Bank | 7-Aug-24 | 1.75 | A+ | 2.18 | 2.14 | 2.18 | 0.01 | 0.31 |
| Wells Fargo | 27-Aug-24 | 4.75 | A+ | 2.30 | 2.24 | 2.30 | 0.03 | 0.36 |
| University of Sydney | 28-Aug-25 | 3.75 | Aa1 | 2.47 | 2.41 | 2.47 | 0.03 | 0.38 |
| Apple Inc | 10-Jun-26 | 3.60 | AA+ | 2.52 | 2.45 | 2.52 | 0.02 | 0.36 |
| CBA | 11-Jun-26 | 4.20 | AA- | 2.58 | 2.53 | 2.58 | 0.00 | 0.31 |
| ANZ | 22-Jul-26 | 4.00 | AA- | 2.59 | 2.53 | 2.59 | 0.01 | 0.30 |
| Qantas | 12-Oct-26 | 4.75 | BB+ | 3.66 | 3.59 | 3.66 | 0.05 | 0.40 |
| Australia Pacific Airports | 4-Nov-26 | 3.75 | BBB+ | 3.17 | 3.11 | 3.17 | 0.03 | 0.39 |
| CBA | 17-Nov-26 | 3.25 | AA- | 2.46 | 2.39 | 2.46 | 0.01 | 0.31 |
| Australia Post | 1-Dec-26 | 4.00 | A+ | 2.65 | 2.59 | 2.65 | 0.00 | 0.35 |
| WSO Finance | 31-Mar-27 | 4.50 | A- | 3.02 | 2.97 | 3.02 | 0.05 | 0.41 |
| Telstra | 19-Apr-27 | 4.00 | A | 2.88 | 2.81 | 2.88 | 0.03 | 0.39 |
| Asciano | 12-May-27 | 5.40 | BBB- | 4.13 | 4.04 | 4.13 | 0.09 | 0.50 |
| Fonterra | 2-Nov-27 | 4.00 | A- | 3.02 | 2.94 | 3.02 | 0.07 | 0.45 |
| Macquarie | 15-Dec-27 | 4.15 | BBB+ | 3.49 | 3.42 | 3.49 | 0.00 | 0.35 |
| AusNet | 21-Aug-28 | 4.20 | A- | 3.35 | 3.29 | 3.35 | -0.01 | 0.50 |