AUD Swaps: 10y bond future underperforms; Paying eases after lunch; EFPs tighter

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US data has prompted AUD swaps bid but such interest turned milder after lunch break. EFPs were tighter with stronger tightening at the longer-end.

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  • 10y bond future underperforms

  • Paying eases after lunch break; EFPs tighter

  • New issues – IFC Kanga tap


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10y bond future underperforms

AUD bond futures have followed the USD rates market weaker, as latest US jobs and PPI data indicated that inflation in the economy may cool without crashing the economy. This prompted renewed expectations that the US Fed would turn less aggressive about further monetary policy tightening.


In mid-afternoon Sydney trading 10-year bond future was underperforming 3-year, down 5.5-ticks at 96.675 and steepening the 3s/10s futures curve by 2.5bps to 38.5bps.



Paying eases after lunch break; EFPs tighter

Flow wise, there was generally stronger paying interest in the morning, which turned less aggressive after lunch break.


A dealer noticed bid-side flows in 10-year at up to above 3.88% in the morning session. 10-year then traded in a tight range between 3.86% and 3.87%.


10-year USD-AUD swap spread narrowed by about 0.75bp to 43bps, but compared to recent low of 27bps in early-March.


5-year has seen relatively busier flow and it was paid up to 3.59% in mid-morning domestic trading before traded mostly between 3.55% and 3.56% after lunch break. 3-year went through 3.4% before mid-day and was last seen changing hands at 3.375%.


EFPs were tighter across the curve with stronger tightening move at the longer-end of the curve. 3-year was down 0.5bp at 45bps, 5-year down 0.75bp at 61.75bps, 10-year down 1.5bps at 54bps.



New issues – IFC Kanga tap

  • Canadian Imperial Bank of Commerce (CIBC) has launched a 3-year fixed- and/or floating-rate benchmark covered bond offer with price guidance at around +82bps area. The transaction is expected to price later today. Leads are CIBC, NAB, Nomura, RBC and Westpac.


  • IFC has tapped the following Kangaroo bond lines:


    • AUD50m to 3.15% June 26, 2029 at ACGBs + 54.25bps to bring the new size to AUD1.05bn.

    • AUD50m to 1.5%, April 15, 2035 to bring the new size to AUD1.5bn. Priced at ACGBs + 37.95bps.


  • New South Wales Treasury Corp has upsized its existing bond lines as follows:


    • AUD50m to 3%, February 20, 2030 to bring the new size to AUD10.67bn at ACGBs + 32bps. Leads are ANZ, CBA and UBS.

    • AUD100m to 1.5%, February 20, 2032 at 33.1bps over ACGBs to bring the new size to AUD11.21bn.


  • Nickel Industries Ltd raised USD400m via selling 11.25% October 21 2028 callables via BofA and MS in 144A and Reg S formats. The deal is callable anytime from October 2025 with sink features.


  • Royal Bank of Canada London branch self-led AUD45m in April 27, 2039 callable zeros with annual call options from April 2033.


  • Royal Bank of Canada Sydney branch self-led AUD200m in March 22, 2024 FRNs that pay AUD 3M BBSW + 60bps.


  • UK-based water company Severn Trent Plc sold AUD40m in 5.41% April 20, 2033 bonds.


  • Treasury Corp of Victoria added AUD100m to its existing 4.25%, December 20, 2032 bond line to bring the new size to AUD10.2bn.