Capital markets take a laid back approach

After the rush of issuance in January, the domestic corporate bond market has settled into a fairly laid back February. At the halfway mark the issuance total is just A$3.6 billion.



Last week, $2.4 billion of bonds were added with the highlight being the return of BMW Australia Finance (rated A+). BMW is a rare issuer in this market.



The company launched a $300 million, three-year issue with indicative pricing of 70 basis points over swap, and priced a $500 million issue with pricing five bps tighter - such was the demand from investors.

Corporate compatriot Volkswagen Financial Services Australia is a frequent issuer in the domestic market, while Mercedes-Benz Australia only issues in the Euromarket.



Emirates NBD (BBB+), the product of a merger between Emirates Bank and National Bank of Dubai, returned after making its market debut at the end of April last year.



The bank's debut issue was $400 million of five-year bonds, priced at 219 bps over swap. This time it sold $450 million of seven-year bonds, priced at 225 bps over.



And after quietly placing a $30 million of five-year floating rate notes the week before, Bank of Queensland (A-) sold a 2.25-year $500 million FRN at a margin of 75 bps over bank bills.



IBRD (AAA), IADB (AAA) and Province of Ontario (AA-) represented the SSA sector.


IBRD added $350 million to its June 2025 line, priced at CGS (commonwealth government securities) plus 44.25 bps, to take the total outstanding to $950 million.  



IADB tapped two lines, adding $200 million to its February 2020 line and $150 million to the August 2024 line. The increases take the total outstanding in each line to $1.05 billion and $1 billion respectively. The taps were priced at CGS plus 50.75 bps and CGS plus 46 bps respectively.



Province of Ontario opened a new August 2025 line at $125 million. The bonds were priced at 67 bps over CGS.



Over in New Zealand, International Finance Corporation (AAA) topped-up its May 2020 line by NZ$200 million to take the total outstanding to NZ$425 million, and Kommunalbanken (AAA) increased its May 2021 line by NZ$200 to NZ$350 million.



The increases were priced at 59.75 bps and 74.5 bps over New Zealand government bonds respectively.

In the Euromarket, NAB sold €1 billion of 12-year covered bonds. The issue was priced at 18 bps over mid-swaps, a few points tighter than the launch level.



It is understood that the proceeds swapped back into Australia dollars at 94 bps over bank bills.