AUD Swaps: Spreads widen; Digital currency study

Blue chart 1 Jun 2021
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AUD swap spreads are wider on the corrective rally. The RBA is leading a digital currency feasibility study.

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  • Spreads widen as bullish correction extends

  • RBA to lead CBDC feasibility study

  • New issues

 

Click here for SDR AUD IRS trades

 

Spreads widen as bullish correction extends

The AUD rates market correction is extending after the strong US jobs report triggered a sharp sell-off. In late morning Sydney trading futures implied yields are up to 6.5bps lower and the 3s/10s futures curve is 3bps flatter at 17.5bps.

 

Swap rates have dropped on the rally and trade flow has remained confined to the more liquid tenors. 3- and 10-year swaps have traded at levels around 3.30-3.305% and 3.585-3.595%. In the superlong sector there have been deals in 15-year swaps around 3.655% and in 20-year swaps around 3.605%.

 

Forward space has been calmer but there has been some trade in 1m10y around 3.65%.

 

Swap spreads have moved wider. The 3- and 10-year EFPs are now marked around 30.5bps and 41.25bps, so the 3s/10s box spread is steady around at levels just below 11bps.

 

 

RBA to lead CBDC feasibility study

Australia is looking at the case for launching a central bank digital currency (CBDC).

 

In a press release issued this morning the RBA and Digital Finance Cooperative Research Centre (DFCRC) announced that a joint initiative is underway to consider “the use cases for a CBDC and the potential economic benefits of introducing one.”

 

It explained, “The project with the DFCRC will help address this gap by focusing on innovative use cases and business models that could be supported by the issuance of a CBDC. The project will also be an opportunity to further understanding of some of the technological, legal and regulatory considerations associated with a CBDC.”

 

The RBA said it would work on the project for “about a year” and that a CBDC pilot scheme would be part of that. It added, “A report on the findings from the project, including an assessment of the various use cases developed, will be published at the conclusion. “

 

 

New issues

  • Credit Suisse is planning a 3-year bond issue in a deal to be jointly led by ANZ, CBA, Credit Suisse, NAB, TD and Westpac.

     

  • New South Wales Treasury Corporation added AUD100m to its existing 2% Mar 8, 2033 bond taking outstanding issuance to AUD6.58bn.

     

  • Landesbank Baden-Wuerttemberg issued a AUD35m 2-year fixed rate bond in a self led deal. It pays an annual 3.30% coupon to maturity on Sep 3, 2024.

     

  • Standard Chartered Bank issued a AUD2.03m 3-year step up coupon bond. It pays an initial quarterly 3.50% coupon in Year 1 then steps up by 10bps for its remaining life. It matures Aug 15, 2025. 

     

  • Treasury Corporation of Victoria added AUD2.025bn to its 2.25% Sep 15, 2033 bond. The tap took the issue size to AUD6.193bn.

     

  • Barclays Bank PLC self led a AUD14m callable 7yNC3 fixed-rate bond. It pays an annual 5.18% coupon, is callable at par annually from Aug 2025 and if not called has a final maturity of Aug 12, 2029.

     

  • Natixis issued a AUD20m callable 15yNC2 fixed rate bond in a self led deal. It pays an annual 5.70% coupon and is callable at par in Aug 2024, then annually at par from Aug 2032. If not called the final maturity date is Aug 18, 2037.

     

  • Natixis issued a AUD20m callable 15yNC2 fixed rate bond in a self led deal. It pays an annual 5.75% coupon and is callable at par in Aug 2024, then annually at par from Aug 2032. If not called the final maturity date is Aug 19, 2037.

     

  • Westpac self led a AUD950m 3-year Domestic MTN deal. It was issued at 99.625, pays a semi annual 3.90% coupon and matures Aug 11, 2025.