Corporate bond market shrugs off Brexit uncertainty
Despite a slow start reflecting uncertainty about the Brexit decision, July has ended as the second strongest month of the year to date in the domestic corporate bond market. Bonds worth A$10.3 billion were issued over the month - behind the $13.1 billion of issuance seen in May.And at $59.6 billion, year to date issuance is pretty much line ball with the $60.3 billion of issuance seen at the same time last year. Unlike the same period last year, the market has seen some big names make their debut or return after a period of absence.Bank of America Corporation (rated BBB+) arguably falls into the latter category. Last week it joined the growing trend towards Australian dollar denominated, global bond issuance. BofA has not been seen in the domestic market for almost two years.The bank holding company sold $550 million of five-year floating-rate notes and $200 million of five-year fixed-rate notes. The notes priced at 155bps over the bank bill swap rate.In August 2014, when BofA was rated a notch higher, it raised $675 million and $425 million in the same floating and fixed form, and paid 115 bps over for the 5.5-year funds.The issuance by Bank of America was the highlight of an otherwise quiet week.Commonwealth Bank (rated AA-) added another $500 million to the $500 million of August 2017 FRNs it sold the week before. The spread was unchanged at 43 bps over bank bills.The International Bank for Reconstruction and Development (rated AAA) added $700 million to its January 2021 line, taking the size of the line to $2.6 billion, with pricing at 55 bps over commonwealth government securities. It also added $150 million to its October 2026 line, taking the size of the line to $300 million, with pricing at 60.75 bps over CGS.KommuneKredit (rated AAA) added a total $55 million to its November 2026 line over the course of the week. A $30 million tap was priced at 86.25 bps over CGS and two days later a further $25 million was priced at 89 bps over. The line now stands at $215 million. And Nederlandse Waterschapsbank (rated AAA) saw out the week with a $35 million tap of its September 2026 line on Friday. With the tap priced at 88.5 bps over CGS, the line now stands at $300 million.In New Zealand, Wellington International Airport (rated BBB+) completed the bookbuild for a NZ$60 million, eight-year bond issue on Friday. The bonds, which will be listed on the NZDX under the ticker WIA040, will yield four per cent. In the structured finance sector, Bank of Queensland advised of its intention to refinance the Class A2 notes issued in the Series 2013-1 REDS Trust transaction. The notes were issued with a three-year soft bullet maturity and will be replaced by $170 million of Class A2R notes.