Corporate

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.

That night, Commonwealth Bank raised €1.25 billion (AUD$2.0 billion) in euro-zone markets at Mid-Swap + 10bps via an issue of covered bonds maturing in February 2028.

The next day, United Overseas Bank’s Sydney branch raised $900 million via February 2027 FRNs priced at BBSW + 72bps.

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There were two primary market transactions for asset-backed securities during the week.

On Tuesday, the Bank of Queensland priced $237 million worth of Class A-R units at 1m BBSW + 67bps from its 2017-1 REDS Trust

A couple of days later, Columbus Capital raised $1.5 billion for its Triton 2022-1 Trust over eleven tranches, with the Class A securities split into three tranches. The $320 million Class A1-MM tranche was priced at 1m BBSW + 55bps, the $725 million Class A1-AU tranche was priced at 1m BBSW + 100bps and the $230 million Class A1-5Y tranche was priced at 1m BBSW + 120bps. The tranches are backed by Australian prime residential mortgages.

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Volumes in the primary market for kangaroo bonds surged during the week as seven separate issuers raised a total of nearly $2 billion.

Most of them were regular issuers such as the European investment Bank ($150 million, October 2025s), Council of Europe Development Bank ($250 million, February 2027s), KfW Bankengruppe ($750 million, August 2025s) and Kommunalbanken Norway ($100 million, June 2026s).

However, infrequent issuers such as Avanti Finance were also present, raising $100 million via a February 2026 FRN, callable in February 2024, at BBSW + 450bps.

Nomura Research Institute made its debut in the kangaroo market, raising $200 million at Swap + 124bps via an issue of February 2032s.

In rating news, Moody’s affirmed Macquarie Group’s A3 rating and Macquarie Bank’s A2 rating and amended their respective outlooks from stable to positive.

Moody’s also place Crown Resort’s Baa3 rating on review for a downgrade following the company’s deal with Blackstone.

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	0.15	0.00	-0.02
CBA	30-Mar-22	3.25	AA-	0.14	0.13	0.13	-0.01	-0.03
Optus	17-Jun-22	4.00	A	0.44	0.43	0.44	-0.04	-0.04
GE Capital	8-Aug-22	5.50	BBB+	0.56	0.55	0.55	0.02	0.04
Optus	23-Aug-22	3.25	A	0.61	0.56	0.58	-0.06	0.03
Apple Inc	28-Aug-22	3.70	AA+	0.43	0.41	0.43	0.00	0.03
Wells Fargo	7-Sep-22	5.25	A-	0.62	0.59	0.62	0.02	0.06
Melbourne Airport	15-Sep-22	4.00	BBB+	0.61	0.55	0.61	0.01	0.04
Telstra	16-Sep-22	4.00	A	0.55	0.50	0.52	-0.05	0.00
Stockland	23-Nov-22	4.50	A-	0.62	0.57	0.59	-0.03	0.06
ANZ	16-Aug-23	5.00	AA-	1.28	1.23	1.25	-0.05	0.26
Transpower NZ	28-Aug-23	5.75	AA-	1.32	1.27	1.29	0.02	0.40
Mirvac Finance	18-Sep-23	3.50	BBB+	1.60	1.53	1.60	0.03	0.47
Qantas	10-Oct-23	4.40	BB+	2.32	2.27	2.30	-0.02	0.36
Australia Post	13-Nov-23	5.50	A+	1.57	1.51	1.52	-0.05	0.36
Westpac	21-Nov-23	4.40	AA-	1.50	1.45	1.46	-0.05	0.32
Fonterra	26-Feb-24	5.50	A-	1.74	1.69	1.71	-0.03	0.43
NAB	11-Mar-24	5.00	AA-	1.72	1.67	1.69	-0.04	0.40
Rabobank Nederland (Aust)	11-Apr-24	5.50	A+	1.90	1.85	1.87	-0.04	0.40
CBA	27-May-24	4.75	AA-	1.87	1.82	1.83	-0.04	0.34
AusNet	21-Jun-24	4.00	BBB+	2.28	2.23	2.28	-0.02	0.45
Macquarie Bank	7-Aug-24	1.75	A+	2.23	2.16	2.17	-0.06	0.33
Wells Fargo	27-Aug-24	4.75	A+	2.28	2.22	2.27	0.00	0.51
University of Sydney	28-Aug-25	3.75	Aa1	2.47	2.41	2.44	-0.02	0.39
Apple Inc	10-Jun-26	3.60	AA+	2.51	2.45	2.50	0.01	0.51
CBA	11-Jun-26	4.20	AA-	2.60	2.53	2.58	-0.01	0.53
ANZ	22-Jul-26	4.00	AA-	2.60	2.54	2.58	0.00	0.52
Qantas	12-Oct-26	4.75	BB+	3.62	3.56	3.61	0.00	0.53
Australia Pacific Airports	4-Nov-26	3.75	BBB+	3.14	3.06	3.14	0.03	0.52
CBA	17-Nov-26	3.25	AA-	2.46	2.39	2.45	-0.02	0.53
Australia Post	1-Dec-26	4.00	A+	2.66	2.59	2.65	0.00	0.52
WSO Finance	31-Mar-27	4.50	A-	2.98	2.91	2.97	0.01	0.54
Telstra	19-Apr-27	4.00	A	2.86	2.79	2.85	0.02	0.53
Asciano	12-May-27	5.40	BBB-	4.04	3.95	4.04	0.05	0.57
Fonterra	2-Nov-27	4.00	A-	2.95	2.87	2.95	0.03	0.56
Macquarie	15-Dec-27	4.15	BBB+	3.49	3.41	3.49	0.03	0.52
AusNet	21-Aug-28	4.20	A-	3.36	3.24	3.36	0.09	0.66