ANZ became the latest of the major banks to issue non-government guaranteed bonds last week, following the now well-established pattern of issuing three-year bonds. In a minor variation on the pattern, the credit spread over swap and bank bills, for the $600 million fixed and $400 million floating rate tranches, was 128 basis points instead of the usual 130 bps. Some progress is being made with spread contraction.Further spread contraction on primary issuance would be a positive development for the market, but the next real test will be for the banks to issue five-year bonds without a government guarantee. Westpac is the only one the big four banks yet to issue without a Commonwealth government guarantee, but with publication of its interim results last Wednesday it seems likely Westpac will follow the trend of other major banks.