Summary: Corporate bond spreads 5bps wider on average; swap spreads tighter; iTraxx down 0.5 points; issuance volumes increase on back of major-bank deal, asset-backed deals; no primary-market kangaroo deals; four ABS transactions.
Corporate spreads finished the week about 5bps wider on average as corporate yields generally lagged the falls of their Commonwealth counterparts, especially at the short end of the curve. The majority of spreads’ week-on-week changes at the individual level were within a range of -1bp to +12bps. There were no particularly notable exceptions apart from a few bonds which are close to maturity.
One of the two other main measures of corporate risk, swap-to-bond spreads, tightened along the curve. The other measure, credit default swap premiums, declined slightly. The Australian credit default swap index, the iTraxx Australia Series 37, finished 0.50 points lower at 104.50 points.
Volumes in the primary market for corporate bonds and notes remained at above-average levels on the back of another large major bank deal and a swag of asset-backed deals. $7.0 billion worth of bonds or notes were priced by local entities or their subsidiaries, whereas in the previous week issuance amounted to $5.3 billion. Asset-backed transactions accounted for $3.2 billion of $7.0 billion.
Not much took place until midweek when banking minnow QBank raised $10 million via May 2025 FRNs at 3m BBSW + 135bps.
That night, Amcor Flexibles issued USD$500 million (AUD$720 million) worth of May 2025s at Treasury + 120bps.
At the end of the week, Westpac raised a total of $3 billion via three tranches, two of which comprised covered bonds with May 2025 maturities. The fixed rated tranche was priced at Swap + 73bps while the FRNs were priced at BBSW + 73bps. The $1 billion tranche of May 2027 FRNs were not covered and it was priced at BBSW + 105bps.
RACQ Bank returned to the local market after a two-year absence to issued $55 million worth of May 2025 FRNs at 3m BBSW + 125bps, 32bps higher than a similar deal in February 2020.
There were no deals done in Once again, there were no deals done in the primary market for kangaroo bonds.
There were four RMBS deals done during the week.
Midweek, Bluestone raised $1 billion for its Prime 2022-1 Trust with the $200 million Class A1S tranche priced at 1m BBSW + 80bps.
The next day, Bendigo raised $500 million for its Torrens 2022-2 trust. The $460 million Class A tranche was priced at 1m BBSW + 120bps.
At the end of the week, RESIMAC raised $1 billion for its Bastille Trust Series 2022-1 NC vehicle. The $105 million Class A1 tranche at 1m BBSW + 80bps. The tranches are backed by non-conforming mortgages.
A little later that day, Pepper issued $700 million worth of asset-backed securities over eight tranches from its Sparkz Trust No.5. The tranches are backed by automotive and equipment loans and the $528.5 million Class A1-a tranche was priced at 1m BBSW + 130bps.
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 | 17-Jun-22 | 4.00 | A | 0.98 | 0.90 | 0.98 | 0.10 | 0.20 |
| GE Capital | 8-Aug-22 | 5.50 | BBB+ | 1.84 | 1.77 | 1.80 | 0.05 | 0.87 |
| Optus | 23-Aug-22 | 3.25 | A | 1.58 | 1.55 | 1.57 | 0.04 | 0.59 |
| Apple Inc | 28-Aug-22 | 3.70 | AA+ | 1.46 | 1.42 | 1.45 | 0.01 | 0.69 |
| Wells Fargo | 7-Sep-22 | 5.25 | A- | 1.87 | 1.83 | 1.84 | -0.03 | 0.67 |
| Melbourne Airport | 15-Sep-22 | 4.00 | BBB+ | 2.15 | 1.49 | 1.53 | 0.03 | 0.45 |
| Telstra | 16-Sep-22 | 4.00 | A | 1.72 | 1.69 | 1.70 | 0.02 | 0.60 |
| Stockland | 23-Nov-22 | 4.50 | A- | 1.87 | 1.80 | 1.80 | -0.03 | 0.61 |
| ANZ | 16-Aug-23 | 5.00 | AA- | 3.20 | 3.02 | 3.02 | -0.15 | 0.74 |
| Transpower NZ | 28-Aug-23 | 5.75 | AA- | 3.14 | 2.96 | 2.96 | -0.08 | 0.74 |
| Mirvac Finance | 18-Sep-23 | 3.50 | BBB+ | 3.41 | 3.23 | 3.23 | -0.07 | 0.67 |
| Qantas | 10-Oct-23 | 4.40 | BB+ | 4.14 | 4.02 | 4.02 | -0.12 | 0.67 |
| Australia Post | 13-Nov-23 | 5.50 | A+ | 3.28 | 3.10 | 3.10 | -0.16 | 0.60 |
| Westpac | 21-Nov-23 | 4.40 | AA- | 3.48 | 3.29 | 3.29 | -0.16 | 0.73 |
| Fonterra | 26-Feb-24 | 5.50 | A- | 3.66 | 3.47 | 3.47 | -0.15 | 0.60 |
| NAB | 11-Mar-24 | 5.00 | AA- | 3.53 | 3.34 | 3.34 | -0.14 | 0.53 |
| Rabobank Nederland (Aust) | 11-Apr-24 | 5.50 | A+ | 3.68 | 3.49 | 3.49 | -0.15 | 0.54 |
| CBA | 27-May-24 | 4.75 | AA- | 3.72 | 3.51 | 3.51 | -0.17 | 0.62 |
| AusNet | 21-Jun-24 | 4.00 | BBB+ | 4.30 | 4.13 | 4.13 | -0.16 | 0.59 |
| Macquarie Bank | 7-Aug-24 | 1.75 | A+ | 4.08 | 3.88 | 3.88 | -0.21 | 0.63 |
| Wells Fargo | 27-Aug-24 | 4.75 | A+ | 4.26 | 4.04 | 4.04 | -0.16 | 0.55 |
| University of Sydney | 28-Aug-25 | 3.75 | Aa1 | 3.98 | 3.74 | 3.74 | -0.22 | 0.32 |
| Apple Inc | 10-Jun-26 | 3.60 | AA+ | 4.11 | 3.90 | 3.90 | -0.14 | 0.50 |
| CBA | 11-Jun-26 | 4.20 | AA- | 4.34 | 4.09 | 4.09 | -0.17 | 0.50 |
| ANZ | 22-Jul-26 | 4.00 | AA- | 4.29 | 4.08 | 4.08 | -0.14 | 0.45 |
| Qantas | 12-Oct-26 | 4.75 | BB+ | 5.40 | 5.19 | 5.19 | -0.13 | 0.42 |
| Australia Pacific Airports | 4-Nov-26 | 3.75 | BBB+ | 4.86 | 4.64 | 4.64 | -0.16 | 0.44 |
| CBA | 17-Nov-26 | 3.25 | AA- | 4.35 | 4.09 | 4.09 | -0.08 | 0.56 |
| Australia Post | 1-Dec-26 | 4.00 | A+ | 4.19 | 3.99 | 3.99 | -0.12 | 0.45 |
| WSO Finance | 31-Mar-27 | 4.50 | A- | 4.67 | 4.48 | 4.48 | -0.12 | 0.47 |
| Telstra | 19-Apr-27 | 4.00 | A | 4.50 | 4.29 | 4.29 | -0.11 | 0.42 |
| Vicinity Centre | 26-Apr-27 | 4.00 | A | 4.69 | 4.48 | 4.48 | -0.14 | 0.30 |
| Dexus Finance | 11-May-27 | 4.25 | A3 | 4.66 | 4.42 | 4.42 | -0.15 | 0.43 |
| Asciano | 12-May-27 | 5.40 | BBB- | 5.80 | 5.62 | 5.62 | -0.09 | 0.50 |
| Fonterra | 2-Nov-27 | 4.00 | A- | 4.61 | 4.42 | 4.42 | -0.12 | 0.39 |
| Macquarie | 15-Dec-27 | 4.15 | BBB+ | 5.43 | 5.17 | 5.17 | -0.14 | 0.65 |
| AusNet | 21-Aug-28 | 4.20 | A- | 5.27 | 5.11 | 5.11 | -0.02 | 0.62 |