AUD Swaps: Swaps offered as RBNZ signals end of tightening cycle; SEK Kanga

Curve bend road 30 Jan 2023
RBNZ surprised the market by signalling end of its tighening cycle, triggering some good receiving in 3y AUD swaps. SEK sold a new 5y Kanga.

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  • Futures curve bull-steepens as RBNZ signals end of tightening cycle

  • Good 3y offers; EFPs mixed

  • AOFM sells 2034 ACGBs

  • New issues


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Futures curve bull-steepens as RBNZ signals end of tightening cycle

AUD bond futures moved in a tight range around yesterday’s close, as the market lacked direction without any key data release, and players were cautious before the decision of the debt-ceiling negotiation. They then jumped after lunch break after the monetary policy meeting in New Zealand.


New Zealand’s central bank hiked interest rate by 25bps to 5.5% today, the highest in more than 14 years and in line with the market’s expectation. However, it surprised the market by signalling that the country had reached its peak rate. "The Monetary Policy Committee reached a consensus that interest rates will need to remain at a restrictive level for the foreseeable future, to ensure consumer price inflation returns to the 1 to 3% target range while supporting maximum sustainable employment," according to the RBNZ minutes.


3-year bond future was up by 9-ticks soon after the decision before being marked 7-ticks higher of 96.7. The 3s/10s futures curve bull-steepened by 4bps to 32.5bps.  



Good 3y offers; EFPs mixed

Swap trading was rather quiet in the morning, but turned active after RBNZ. 10-year, for example, was offered down 7bps to 4.125% in the afternoon session, after being traded in a tight range around 4.165% in the morning.


3-year traded mostly around 3.76% in earlier trading. It went down to 3.69% in mid-afternoon domestic trading, down from previous close of 3.79%. The 3s/10s curve flattened out by 3bps to 43.25bps.


EFPs were mixed. 3-year was down 0.25bp at 38.25bps, 5-year up 1.5bps at 50.75bps and 10-year up marginally at 50.25bps.



AOFM sells 2034 ACGBs

The AOFM sold AUD800m in 3.5% December 21, 2034 ACGBs at tender today, bringing the new size of the line to AUD14.8bn. Bid-to-cover was 3.62 times and average yield was 3.7227%.



New issues

  • Credit Agricole raised AUD900m via selling June 1, 2028 bonds as follows:


    • AUD300m, 5.364%.

    • AUD600m paying AUD 3M BBSW + 160bps.


  • QIC Finance Town Centre Fund Pty Ltd issued via ANZ, CBA and Westpac AUD200m in 5.5% May 30, 2029 bonds at 180bps over ASWs. Callable at par from Mary 2029.


  • Swedish Export Credit Corporation (SEK) raised AUD500m via selling new 4.3% May 30, 2028 Kangaroo bonds at 63bps over ASWs.


  • New South Wales Treasury Corp upsized the following bond lines:


    • AUD425m to 2%, March 8, 2033 to AUD12.59bn at 61.75bps over ACGBs.

    • AUD150m to 1.5%, February 20, 2032 to AUD11.56bn at 33.1bps over ACGBs.

    • AUD100m to 3%, February 20, 2030 to AUD10.77bn at ACGBs + 32bps. Leads are ANZ, CBA and UBS.