Spreads start to tighten in the debt capital market
Thanks to a A$2.75 billion five-year benchmark issue from ANZ (rated AA-) there was more than $4.6 billion of bonds issued in the domestic corporate bond market last week. This is the busiest the market has been since the last week of May when $5.5 billion of bonds were issued, led by a five-year benchmark issue from Westpac.Last week was also notable for more one-year issuance by CBA (rated AA-) and the Sydney branch of Royal Bank of Canada (AA-). And there was more line tapping, with Auckland Council (rated AA) and ME Bank (BBB+) joining in. ANZ exceeded Westpac's $2.3 billion benchmark issue by selling $2.45 billion of floating rate notes and $250 million of fixed-rate bonds. The FRN issue later upsized to $2.5 billion.ANZ also did better with pricing, achieving 113 basis points over the bank bill swap rate, which is the lowest level seen for five-year funds since December last year. However, Westpac achieved an even better level in the US s144A market last week - more on that below.CBA paid a margin of 121 bps in early July. Perhaps the spread widening trend is starting to reverse, although this won't help the banks' cost of funds argument used to justify not passing on official cash rate cuts in full to borrowers.After raising $1 billion for one year in July, CBA was back last week with a $500 million one-year issue. Pricing was unchanged at 43 bps over bank bills.Royal Bank of Canada, Sydney branch, also sold one-year FRNs and paid 48 bps over.ME added $100 million to its November 2017 line and paid 105 bps over bank bills for the 1.25-year funds. The size of the line now stands at $350 million.Auckland Council added another $30 million to the March 2026 line that it opened in September last year. The latest increase, priced at 83.5 bps over commonwealth government securities, takes the total outstanding to $300 million.KfW (rated AAA) added $200 million to its already sizeable January 2019 line. The increase was priced at CGS plus 48.25 bps and the line now totals $2.1 billion.Asian Development Bank (rated AAA) increased its January 2021 line by $250 million to $550 million. The increase was priced at 54 bps over CGS.Eurofima (rated AA+) added $30 million to its January 2027 line, taking the line to $95 million. KommuneKredit added A$25 million to its November 2026 line, taking the line to $240 million.Nordic Investment Bank (rated AAA) was busy here and across the Tasman.NIB increased its local February 2026 line by $50 million to $270 million and priced the increase at 53.5 bps over CGS. In New Zealand it added NZ$50 million to its September 2025 line. The increase takes the size of the line to NZ$200 million and was priced at 64 bps over mid-swaps.Bank Nederlandse Gemeenten (rated AAA) added $50 million to its August 2026 line, taking the line to $185 million. Swedish Export Credit Corporation (rated AAA) added $30 million to its September 2026 line,