AUD Swaps: Good 3-10y bid after Bank of Canada; ADB new Kangaroo bond

• AUD rates sold off further after Bank of Canada

• Good 3-10y bid; Key EFPs little moved

• New issues – ADB new kanga

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AUD rates sold off further after Bank of Canada

Players in the Australian market sold off AUD rates on the day, as the latest 25bp interest rate hike by the Bank of Canada has triggered fears that the US Fed and the RBA would tighten for longer and more aggressively.

10-year US treasury yield rose by 12bps in overnight trading. In mid-afternoon Sydney trading, 3- and 10-year AUD bond futures was down 16-16.5 ticks at 96.14 and 96 respectively. The 3s/10s futures curve, which flattened to record low of 13.5bps on the previous day, steepened up by half a basis point to 14bps.

The selloff in AUD rates was also despite of weaker than expected domestic data.

Official data released earlier today showed that in April, the trade surplus in Australis came in below economists’ expectation of AUD13.65bn and narrowed from AUD14.82bn in March to AUD11.16bn.

Good 3-10y bid; Key EFPs little moved

The sharp selloff in the underlying cash bond market has prompted similar move in the swap market. A dealer reported paying in 3-year at up to just above 4.17% in the afternoon session, up from those traded around 4.02% near market close on the previous day.

10-year was also paid up in overnight trading and traded at 4.4%. such sentiment continued in domestic trading today and it was last seen changing hands around 4.435%. These compared to previous close of around 4.28%.

EFPs were mostly little moved with some clearer tightening beyond the 10-year point. 3-year was down 0.25bp at 31.5bps, 5-year unchanged at 37.25bps and 10-year down marginally at just above 44bps.

New issues – ADB new kanga

• Asian Development Bank sold a new AUD300m 4.5%, June 20, 2030 Kangaroo bond at ASWs + 49bps.

   

• Credit Agricole self-led AUD29m in 6.4% June 14, 2038 callables with annual call at par form June 2026.

   

• Bendigo and Adelaide Bank raised AUD750m via selling the following June 16, 2028 bonds:

   

  • AUD350m, 5.1% at ASWs + 115bps.

  • AUD400m paying AUD 3M BBSW + 115bps.

   

• KfW has upsized its existing 4.2% February 8, 2028 Kangaroo bond line by AUD200m to bring the new size to AUD1.1bn. Leads are ML and TD.

   

• Standard Chartered Bank self-led AUD14m in 5.95% June 15, 2033 callables with annual call at par from June 2027.

   

• Treasury Corp of Victoria has increased the size of its existing bond lines as follows:

   

  • AUD118m to 3% November 20, 2037 line to AUD2.98bn.

  • AUD157m to 2.25%, November 2034 line to AUD5.91bn.

  • AUD225m to 4.25%, December 20, 2032 line to AUD11.10bn.