Summary: Corporate bond spreads 3bps wider on average; swap spreads widen noticeably; iTraxx up another 6.50 points; local issuance increases noticeably; three RMBS transactions; no primary-market kangaroo deals.
Corporate yields generally lagged the falls of their Commonwealth Government counterparts, producing a 3bps rise of the median spread at the end of the week. The majority of spreads’ week-on-week changes at the individual level were within a range of zero to +8bps. There was one notable exception; the yield of Macquarie August 2024s (spread: 76bps, +11bps) outpaced its benchmark considerably.
One of the two other measures of corporate risk, swap-to-bond spreads, widened noticeably. The other measure, credit default swap premiums, again increased on average. The Australian credit default swap index, the iTraxx Australia Series 36, finished 6.50 points higher at 93.00 points.
Volumes in the primary market for corporate bonds and notes increased noticeably on the back of a large bond issue from a major bank. $9.0 billion worth of bonds or notes were priced by local entities or their subsidiaries, whereas in the previous week issuance amounted to $2.4 billion. Asset-backed transactions accounted for $2.5 billion of the $9.0 billion.
There was only one local issuer present during the week.
Commonwealth Bank started with a modest $350 million issue of June 2023 FRNs at BBSW + 25bps.
It then got down to business with a five-tranche issue which raised a total of USD$4.5 billion ($6.2 billion) on Thursday night. The USD$1.25 billion (AUD$1.70 billion) fixed-rate tranche of March 2025s was priced at Treasury + 63bps while the USD$650 million (AUD$890 million) floating-rate tranche was priced at SOFR + 74bps. The USD$1 billion (AUD$730 million) fixed-rate tranche of March 2027s was priced at Treasury + 83bps while the USD$350 million (AUD$475 million) floating-rate tranche was priced at SOFR + 97bps. The final USD$1.25 billion (AUD$1.70 billion) fixed-rate tranche of March 2032s was priced at Treasury + 195bps.
There were three primary market transactions for asset-backed securities during the week.
On Thursday, Firstmac raised $1.2 billion for its Trust No. 4 2022-1. The $1.02 billion Class A1 was priced at BSW + 103bps.
The next day, Plenti raised $280 million for its PL-Green ABS 2022-1 Trust. The $147.8 million Class A1 tranche was priced at BSW + 120bps.
At about the same time, Resimac raised $1 billion for its Premier Series 2022-1 trust. The $90 million Class A1 tranche was priced at 1m BBSW + 55bps and the $910 million Class A2 tranche was priced at 1m BBSW + 95bps
There were no deals in the primary market for kangaroo bonds.
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In ratings news, Moody’s placed CIMIC Groups Baa2 rating on review for a downgrade following an unconditional offer by Hochtief AG to acquire the shares it does not already own. Moody’s also revised the outlook of the University of Sydney’s Aa1 rating 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 |
|---|---|---|---|---|---|---|---|---|
| NAB | 24-Mar-22 | 3.25 | AA- | 0.15 | 0.14 | 0.15 | 0.01 | 0.00 |
| CBA | 30-Mar-22 | 3.25 | AA- | 0.13 | 0.11 | 0.12 | 0.01 | -0.02 |
| Optus | 17-Jun-22 | 4.00 | A | 0.50 | 0.48 | 0.50 | 0.01 | 0.03 |
| GE Capital | 8-Aug-22 | 5.50 | BBB+ | 0.56 | 0.55 | 0.56 | 0.00 | 0.04 |
| Optus | 23-Aug-22 | 3.25 | A | 0.59 | 0.58 | 0.59 | -0.04 | -0.03 |
| Apple Inc | 28-Aug-22 | 3.70 | AA+ | 0.44 | 0.42 | 0.44 | 0.00 | 0.03 |
| Wells Fargo | 7-Sep-22 | 5.25 | A- | 0.67 | 0.61 | 0.67 | 0.06 | 0.08 |
| Melbourne Airport | 15-Sep-22 | 4.00 | BBB+ | 0.63 | 0.59 | 0.63 | 0.00 | 0.02 |
| Telstra | 16-Sep-22 | 4.00 | A | 0.57 | 0.50 | 0.57 | 0.02 | 0.04 |
| Stockland | 23-Nov-22 | 4.50 | A- | 0.67 | 0.64 | 0.67 | -0.02 | 0.02 |
| ANZ | 16-Aug-23 | 5.00 | AA- | 1.21 | 1.16 | 1.21 | -0.04 | 0.12 |
| Transpower NZ | 28-Aug-23 | 5.75 | AA- | 1.22 | 1.20 | 1.22 | -0.07 | 0.09 |
| Mirvac Finance | 18-Sep-23 | 3.50 | BBB+ | 1.51 | 1.48 | 1.51 | -0.06 | 0.12 |
| Qantas | 10-Oct-23 | 4.40 | BB+ | 2.29 | 2.21 | 2.29 | 0.01 | 0.19 |
| Australia Post | 13-Nov-23 | 5.50 | A+ | 1.46 | 1.41 | 1.46 | -0.05 | 0.13 |
| Westpac | 21-Nov-23 | 4.40 | AA- | 1.45 | 1.38 | 1.45 | -0.02 | 0.18 |
| Fonterra | 26-Feb-24 | 5.50 | A- | 1.70 | 1.66 | 1.70 | -0.03 | 0.24 |
| NAB | 11-Mar-24 | 5.00 | AA- | 1.67 | 1.60 | 1.67 | -0.04 | 0.22 |
| Rabobank Nederland (Aust) | 11-Apr-24 | 5.50 | A+ | 1.83 | 1.80 | 1.83 | -0.06 | 0.21 |
| CBA | 27-May-24 | 4.75 | AA- | 1.83 | 1.74 | 1.83 | -0.02 | 0.24 |
| AusNet | 21-Jun-24 | 4.00 | BBB+ | 2.39 | 2.32 | 2.39 | 0.00 | 0.36 |
| Macquarie Bank | 7-Aug-24 | 1.75 | A+ | 2.19 | 2.05 | 2.19 | 0.02 | 0.27 |
| Wells Fargo | 27-Aug-24 | 4.75 | A+ | 2.26 | 2.20 | 2.26 | -0.04 | 0.29 |
| University of Sydney | 28-Aug-25 | 3.75 | Aa1 | 2.40 | 2.35 | 2.40 | -0.07 | 0.27 |
| Apple Inc | 10-Jun-26 | 3.60 | AA+ | 2.42 | 2.40 | 2.42 | -0.10 | 0.24 |
| CBA | 11-Jun-26 | 4.20 | AA- | 2.52 | 2.48 | 2.52 | -0.06 | 0.22 |
| ANZ | 22-Jul-26 | 4.00 | AA- | 2.53 | 2.49 | 2.53 | -0.06 | 0.22 |
| Qantas | 12-Oct-26 | 4.75 | BB+ | 3.63 | 3.59 | 3.63 | -0.03 | 0.34 |
| Australia Pacific Airports | 4-Nov-26 | 3.75 | BBB+ | 3.11 | 3.08 | 3.11 | -0.06 | 0.29 |
| CBA | 17-Nov-26 | 3.25 | AA- | 2.34 | 2.34 | 2.34 | -0.12 | 0.18 |
| Australia Post | 1-Dec-26 | 4.00 | A+ | 2.56 | 2.53 | 2.55 | -0.10 | 0.24 |
| WSO Finance | 31-Mar-27 | 4.50 | A- | 2.99 | 2.95 | 2.99 | -0.03 | 0.35 |
| Telstra | 19-Apr-27 | 4.00 | A | 2.82 | 2.80 | 2.82 | -0.06 | 0.30 |
| Asciano | 12-May-27 | 5.40 | BBB- | 4.09 | 4.05 | 4.09 | -0.04 | 0.43 |
| Fonterra | 2-Nov-27 | 4.00 | A- | 2.98 | 2.94 | 2.98 | -0.03 | 0.39 |
| Macquarie | 15-Dec-27 | 4.15 | BBB+ | 3.45 | 3.39 | 3.45 | -0.03 | 0.30 |
| AusNet | 21-Aug-28 | 4.20 | A- | 3.35 | 3.28 | 3.35 | -0.01 | 0.46 |