Summary: Corporate bond spreads 10bps tighter on average; swap spreads tighter; iTraxx down 3.5 points; local issuance recovers; two RMBS transaction; two primary-market kangaroo deals.
Corporate yields generally lagged the rises of their Commonwealth Government counterparts, resulting in a 10bps fall 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 -13bps to +2bps. The most notable exception was Australia Post’s November 2023s (spread: 35bps, -19bps).
One of the two other main measures of corporate risk, swap-to-bond spreads, tightened all along the curve. The other measure, credit default swap premiums, fell modestly on average. The Australian credit default swap index, the iTraxx Australia Series 36, finished 3.50 points lower at 81.50 points.
Volumes in the primary market for corporate bonds and notes recovered after falling back substantially in the previous week. $3.7 billion worth of bonds or notes were priced by local entities or their subsidiaries, whereas in the previous week issuance amounted to $1.4 billion. Asset-backed transactions accounted for $1.2 billion of the $3.7 billion.
Westpac kicked off the week on Monday night when it issued €1.25 billion (AUD$1.85 billion) worth of covered April 2027s at Mid-Swap + 12bps
The next day was a busy one for local issuers.
Liberty Financial priced $250 million worth of April 2027s at BBSW + 310bps. A similar 5-year deal by Liberty in May 2021 was priced at BBSW + 255bps
Monash University issued a new line of April 2029s. The bonds were priced at Swap + 95bps.
At about the same time, Suncorp priced $290million worth of June 2037 subordinated FRNs, callable in June 2027, at 3m BBSW + 230bps.
There were two primary market transactions for asset-backed securities during the week.
AFG raised $750 million for 2022-1 Prime Trust over eight tranches on Wednesday. The Class A1 securities were split into two tranches; the $150 million Class A1-S tranche was priced at 1m BBSW + 60bps and the $525 million Class A1-L tranche was priced at 1m BBSW + 120bps.
At the end of the week, BC Invest issued eight tranches of securities from its Ruby Bond 2022-1 Trust, raising a total of $416 million. As with AFG’s deal, the Class A1 securities were split into two tranches. The $95 million Class A1-MM tranche was priced at 1m BBSW + 70bps and the $125.7 million Class A1-AU-G tranche was priced at 1m BBSW + 170bps.
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There were two transactions in the primary market for kangaroo bonds.
The Export-Import Bank of Korea raised a total of $650 million via two tranches. The $200 million April 2025 tranche was priced at Swap + 80bps and the $450 million April 2027 FRN tranche was priced at BBSW + 100bps.
A day later, the Province of Quebec issued $60 million worth of April 2033s at Swap + 62bps.
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- | 0.65 | 0.61 | 0.64 | -0.02 | 0.15 |
| Optus | 17-Jun-22 | 4.00 | A | 0.92 | 0.85 | 0.85 | 0.00 | 0.30 |
| GE Capital | 8-Aug-22 | 5.50 | BBB+ | 0.87 | 0.80 | 0.83 | -0.02 | 0.20 |
| Optus | 23-Aug-22 | 3.25 | A | 0.75 | 0.67 | 0.67 | -0.01 | 0.23 |
| Apple Inc | 28-Aug-22 | 3.70 | AA+ | 1.19 | 1.08 | 1.08 | -0.06 | 0.47 |
| Wells Fargo | 7-Sep-22 | 5.25 | A- | 0.99 | 0.89 | 0.89 | 0.03 | 0.26 |
| Melbourne Airport | 15-Sep-22 | 4.00 | BBB+ | 1.01 | 0.90 | 0.94 | 0.03 | 0.39 |
| Telstra | 16-Sep-22 | 4.00 | A | 1.39 | 1.00 | 1.00 | -0.21 | 0.31 |
| Stockland | 23-Nov-22 | 4.50 | A- | 2.13 | 1.98 | 2.00 | 0.11 | 0.75 |
| ANZ | 16-Aug-23 | 5.00 | AA- | 2.09 | 1.96 | 2.00 | 0.14 | 0.71 |
| Transpower NZ | 28-Aug-23 | 5.75 | AA- | 2.41 | 2.28 | 2.32 | 0.14 | 0.75 |
| Mirvac Finance | 18-Sep-23 | 3.50 | BBB+ | 3.24 | 3.09 | 3.11 | 0.10 | 0.83 |
| Qantas | 10-Oct-23 | 4.40 | BB+ | 2.34 | 2.19 | 2.19 | 0.06 | 0.68 |
| Australia Post | 13-Nov-23 | 5.50 | A+ | 2.40 | 2.25 | 2.27 | 0.12 | 0.81 |
| Westpac | 21-Nov-23 | 4.40 | AA- | 2.70 | 2.56 | 2.58 | 0.13 | 0.85 |
| Fonterra | 26-Feb-24 | 5.50 | A- | 2.70 | 2.54 | 2.56 | 0.13 | 0.85 |
| NAB | 11-Mar-24 | 5.00 | AA- | 2.82 | 2.66 | 2.68 | 0.12 | 0.79 |
| Rabobank Nederland (Aust) | 11-Apr-24 | 5.50 | A+ | 2.78 | 2.63 | 2.63 | 0.12 | 0.79 |
| CBA | 27-May-24 | 4.75 | AA- | 3.41 | 3.24 | 3.26 | 0.11 | 0.88 |
| AusNet | 21-Jun-24 | 4.00 | BBB+ | 3.16 | 3.00 | 3.01 | 0.08 | 0.83 |
| Macquarie Bank | 7-Aug-24 | 1.75 | A+ | 3.40 | 3.23 | 3.26 | 0.12 | 0.96 |
| Wells Fargo | 27-Aug-24 | 4.75 | A+ | 3.47 | 3.29 | 3.31 | 0.14 | 0.84 |
| University of Sydney | 28-Aug-25 | 3.75 | Aa1 | 3.47 | 3.25 | 3.26 | 0.08 | 0.74 |
| Apple Inc | 10-Jun-26 | 3.60 | AA+ | 3.64 | 3.49 | 3.49 | 0.13 | 0.91 |
| CBA | 11-Jun-26 | 4.20 | AA- | 3.65 | 3.49 | 3.52 | 0.14 | 0.93 |
| ANZ | 22-Jul-26 | 4.00 | AA- | 4.77 | 4.60 | 4.62 | 0.13 | 0.96 |
| Qantas | 12-Oct-26 | 4.75 | BB+ | 4.19 | 4.03 | 4.05 | 0.14 | 0.88 |
| Australia Pacific Airports | 4-Nov-26 | 3.75 | BBB+ | 3.46 | 3.33 | 3.37 | 0.16 | 0.91 |
| CBA | 17-Nov-26 | 3.25 | AA- | 3.58 | 3.44 | 3.44 | 0.12 | 0.79 |
| Australia Post | 1-Dec-26 | 4.00 | A+ | 4.05 | 3.88 | 3.89 | 0.10 | 0.87 |
| WSO Finance | 31-Mar-27 | 4.50 | A- | 3.88 | 3.72 | 3.74 | 0.13 | 0.86 |
| Telstra | 19-Apr-27 | 4.00 | A | 5.14 | 4.96 | 4.99 | 0.11 | 0.85 |
| Asciano | 12-May-27 | 5.40 | BBB- | 3.99 | 3.83 | 3.84 | 0.12 | 0.83 |
| Fonterra | 2-Nov-27 | 4.00 | A- | 4.46 | 4.37 | 4.39 | 0.17 | 0.90 |
| Macquarie | 15-Dec-27 | 4.15 | BBB+ | 4.49 | 4.36 | 4.37 | 0.16 | 1.01 |
| AusNet | 21-Aug-28 | 4.20 | A- | 4.2 | 3.87 | 4.2 | 0.36 | 0.84 |