Summary: Corporate bond spreads 2bps wider on average; swap spreads mostly tighter; iTraxx up 4 points; primary market issuance rebounds.
Corporate spreads finished the week about 2bps wider on average as corporate yields outpaced the rises of their Commonwealth counterparts. The majority of spreads’ week-on-week changes at the individual level were within a range of -4bps to +12bps, with AusNet’s June 2024s (spread: 200bps, +22bps) the only particularly notable exception.
One of the two other main measures of corporate risk, swap-to-bond spreads, tightened along much of the curve but not at the long end. The other measure, credit default swap premiums, declined modestly. The Australian credit default swap index, the iTraxx Australia Series 37, finished 4.00 points higher at 120.00 points.
Volumes in the primary market for corporate bonds and notes rebounded from the low level of the previous week. $3.1 billion worth of bonds or notes were priced by local entities or their subsidiaries, whereas in the previous week issuance amounted to $1.7 billion. Asset-backed transactions accounted for $2 billion of the $3.1 billion.
There were a couple of deals on Tuesday. The Bank of Queensland started the week’s proceedings with a $200 million tap of its covered May 2025 FRN line at BBSW + 105bps.
Later that night, Toyota Finance Australia went to the UK market to raise £350 million (AUD$615 million) via an issue of June 2027s at Gilt +157bps.
National Housing Finance & Investment Corporation tapped its June 2036s for $65 million the next day. The bonds were priced at ACGB + 58bps, 46bps higher than its previous tap in May 2021
Westpac also tapped an existing line when it raised $300 million at the end of the week. $300 million of March 2025 FRNs were priced at BBSW + 80bps, 11bps more than in March.
The primary market for kangaroo bonds remained shut and there were no deals for a second week.
There were three deals in the asset-backed space during the week, including one from a new entrant.
National Australia Bank raised $1.5 billion over seven tranches for its National RMBS Trust 2022-1 on Wednesday. The Class A securities were priced at 1m BBSW + 120bps and were split into two tranches of $880 million and $500 million.
Now Finance priced its latest ABS offering on the same day. $200 million was raised for Now’s 2022-1 Trust and the $150 million Class A tranche was priced at 1m BBSW + 165bps. The various tranches are backed by consumer loans.
NAB issued $110 million of June 2029 FRNs on Thursday at BBSW + 118bps. Commonwealth Bank issued $140 million of June 2029s the next day, also at BBSW + 118bps. The maturity dates of each are separated by one day.
The primary market for kangaroo bonds shut its door and there were no deals.
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 |
|---|---|---|---|---|---|---|---|---|
| Optus | 23-Aug-22 | 3.25 | A | 2.00 | 1.97 | 1.99 | -0.05 | 0.42 |
| Apple Inc | 28-Aug-22 | 3.70 | AA+ | 1.89 | 1.86 | 1.86 | 0.01 | 0.39 |
| Wells Fargo | 7-Sep-22 | 5.25 | A- | 2.34 | 2.25 | 2.25 | -0.08 | 0.39 |
| Melbourne Airport | 15-Sep-22 | 4.00 | BBB+ | 2.61 | 2.29 | 2.59 | 0.27 | 1.00 |
| Telstra | 16-Sep-22 | 4.00 | A | 2.48 | 2.41 | 2.41 | -0.09 | 0.70 |
| ANZ | 16-Aug-23 | 5.00 | AA- | 4.11 | 3.67 | 3.67 | -0.47 | 0.65 |
| Qantas | 10-Oct-23 | 4.40 | BB+ | 5.13 | 4.67 | 4.67 | -0.36 | 0.63 |
| Australia Post | 13-Nov-23 | 5.50 | A+ | 4.23 | 3.74 | 3.74 | -0.48 | 0.69 |
| Westpac | 21-Nov-23 | 4.40 | AA- | 4.30 | 3.82 | 3.82 | -0.51 | 0.54 |
| Fonterra | 26-Feb-24 | 5.50 | A- | 4.66 | 4.19 | 4.19 | -0.46 | 0.69 |
| NAB | 11-Mar-24 | 5.00 | AA- | 4.45 | 3.94 | 3.94 | -0.53 | 0.58 |
| Rabobank Nederland (Aust) | 11-Apr-24 | 5.50 | A+ | 4.68 | 4.16 | 4.16 | -0.52 | 0.65 |
| CBA | 27-May-24 | 4.75 | AA- | 4.57 | 4.08 | 4.08 | -0.49 | 0.59 |
| AusNet | 21-Jun-24 | 4.00 | BBB+ | 5.12 | 4.74 | 4.74 | -0.35 | 0.62 |
| Macquarie Bank | 7-Aug-24 | 1.75 | A+ | 4.95 | 4.44 | 4.44 | -0.51 | 0.58 |
| Wells Fargo | 27-Aug-24 | 4.75 | A+ | 5.16 | 4.68 | 4.68 | -0.49 | 0.61 |
| University of Sydney | 28-Aug-25 | 3.75 | Aa1 | 4.72 | 4.25 | 4.25 | -0.48 | 0.54 |
| Apple Inc | 10-Jun-26 | 3.60 | AA+ | 4.99 | 4.51 | 4.51 | -0.43 | 0.60 |
| CBA | 11-Jun-26 | 4.20 | AA- | 5.05 | 4.59 | 4.59 | -0.36 | 0.51 |
| ANZ | 22-Jul-26 | 4.00 | AA- | 5.09 | 4.63 | 4.63 | -0.39 | 0.56 |
| Qantas | 12-Oct-26 | 4.75 | BB+ | 6.20 | 5.73 | 5.73 | -0.43 | 0.50 |
| Australia Pacific Airports | 4-Nov-26 | 3.75 | BBB+ | 5.65 | 5.17 | 5.17 | -0.44 | 0.53 |
| Australia Post | 1-Dec-26 | 4.00 | A+ | 5.01 | 4.52 | 4.52 | -0.47 | 0.55 |
| WSO Finance | 31-Mar-27 | 4.50 | A- | 5.50 | 5.09 | 5.09 | -0.41 | 0.62 |
| Telstra | 19-Apr-27 | 4.00 | A | 5.32 | 4.84 | 4.84 | -0.46 | 0.53 |
| Asciano | 12-May-27 | 5.40 | BBB- | 6.61 | 6.15 | 6.15 | -0.44 | 0.47 |
| Fonterra | 2-Nov-27 | 4.00 | A- | 5.49 | 5.02 | 5.02 | -0.46 | 0.58 |
| Macquarie | 15-Dec-27 | 4.15 | BBB+ | 6.23 | 5.68 | 5.68 | -0.44 | 0.53 |
| AusNet | 21-Aug-28 | 4.20 | A- | 6.15 | 5.74 | 5.74 | -0.41 | 0.67 |