AUD Swaps: Mid-day swaps bid; EFPs tighter; Australia Post sustainability bonds

Deflated balloons field 21 Jun 2021
AUD swaps saw light paying in the 3-10y area around mid-day, and EFPs were tighter. Australia Post is planning a 6y sustainability bond offer.

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  • Futures curve flatter

  • Mid-day 3-10y bid; EFPs in

  • New issues


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Futures curve flatter

Renewed worries over a June US Fed rate hike following data showing heightened inflation expectations have backed a selloff in the AUD rates market today.


3-year bond future was down by 5-8 ticks in the morning. The selloff intensified before lunch break and it was then down by 10-ticks at 96.9 intraday, flattening the 3s/10s futures curve by 1.5bps to 31bps.



Mid-day 3-10y bid; EFPs in

Dealers said they were biased towards paying AUD swaps. Indeed, NAB recently revised its forecast and now expects to see Australian cash rate to peak at least 4.1%, and wouldn’t rule out the prospect of further rise to 4.35% if domestic data stays robust for longer.


Trading in swaps has been cautious ahead of the domestic jobs data due mid-week, and the RBA meeting minutes and Westpac consumer confidence index which will be released tomorrow. Consensus is to see unemployment to stay unchanged at 3.5%, but anything below that would trigger paying at the front-end to reflect an adjustment to the expectations of the next RBA policy move, according to a swapper.


3- and 5-year swaps were subdued in the morning, and paying only emerged after mid-day. 3-year traded up to around 3bps higher of 3.485%, while 5-year traded a basis point higher of nearly 3.59%.


10-year has been relatively busier although overall the market has not been overly active. Another player reported paying in 10-year up to 0.75bp higher of 3.905% after lunch break.


EFPs were mostly tighter across the curve. Key EFPs were marked as: 3-year down marginally to 38.75bps, 5-year down 1.75bps at 50.25bps, 10-year down 0.75bp at 50.5bps.



New issues

  • Australia Post is planning a 6-year AUD-denominated senior unsecured sustainability bond offer at around +120-125bps area. The deal is expected to price today. Leads are NAB and Westpac.


  • Rabobank Australia branch has launched a 3-year AUD-denominated benchmark offer at +88bps area.


  • Westpac Banking Corp is expected to price a benchmark 5-year USD-denominated covered bonds in 144A/Reg S format at around 97bps over mid-swaps. Leads are DBS, HSBC, Lloyds, RBC, TD Securities and Westpac.