Global bond issuance soared the first week of January reaching around US$230 billion, making it the busiest start to a year on record as companies and governments moved quickly to secure funding. Strong investor demand, tight credit spreads, and efforts to get ahead of earnings blackouts and expected AI-related borrowing have helped absorb heavy supply across the US, Europe and Asia.
At home, CBA was first out of the gate, raising $5 billion in a senior unsecured deal with bids of more than $9.2 billion:
- A three-year floating rate tranche priced at 3-month BBSW + 60 basis points, raising $1.7 billion
- A five-year fixed rate tranche with a 5.040% coupon equivalent to 74 basis points over semi quarterly swap, raising $1.5 billion
- A five-year floating rate tranche priced at 3-month BBSW + 74 basis points, raising $1.8 billion
In other corporate bond news:
- Canadian pension fund, ACPPIB Capital was the first to issue a kangaroo (global issuer in AUD)
- AusNet has mandated a hybrid 30-year, non-call 10 deal
- Banco Santander issued a $1 billion new five-year senior preferred kangaroo
- A $450m floating rate tranche with a coupon of 3-month BBSW +97 basis points
- A $550m fixed rate tranche with a 5.218% coupon
- Newcastle Greater Mutual Group issued a $500m five-year floating rate note with a coupon of 3-month BBSW + 113 basis points
- Overseas Chinese Banking Corporation in a three-year, senior unsecured floating rate note
- Rabobank is taking indications of interest for a new floating and or fixed five-year deal with price guidance of 82 basis points over swap
I am a long term advocate for allocating to securitised assets. They operate in a highly regulated market, offer multiple protections including owner’s equity, subordination, and residential property in the case of RMBS, yet pay more than equivalent rated corporate bonds. You give up liquidity but gain monthly, floating rate principal and interest income streams. So, I am pleased to be able to publish expert Ken Hanton’s forecast for 2026 and round-up of 2025.
Australia’s banks make up a big share of the domestic corporate bond market, so it’s important to be aware of general trends. Moody’s shares current bank trends, focusing on risks, including defaults, technology, and private credit. This is an excellent article.
Gregory Peters from PGIM expects bonds to stay the course for 2025 and provides insights as to how to navigate the market this year.
Have a great week!
