(27 April 2011 – Australia) Australian companies are selling record amounts of bonds in the US, tapping the lowest relative yields since 2007 as the swaps market makes it cheaper to exchange money raised abroad into local currency.National Australia Bank (NAB), Telstra and Woolworths led borrowers selling $US30.7 billion (A$28.6 billion) of notes as of 14 April, the biggest start to a year on record, according to data compiled by Bloomberg.
Australian firms need to refinance as much as A$80 billion of maturing borrowings this year, according to NAB, as well as fund expansion to meet demand in an economy that the central bank estimates will grow 4.25 percent this year.
Bond sales in the US have surged 24 percent to US$452.4 billion this year compared with US$44.1 billion of sales in Australia. US relative yields touched 145 basis points on 8 April, the lowest since October 2007, a Bank of America Merrill Lynch index shows.
The cost of bringing the proceeds back to Australia, gauged by the five-year basis swap, has fallen seven basis points this year to 20.5 and dropped last month to the lowest since September 2009.
The increase in bond sales comes after bank lending to businesses shrank on an annual basis in February for a record 20th month, declining 1.7 percent from the same month of 2010, according to Reserve Bank data.