(20 August 2008 – Australia) Australian banks have increased their sales of bonds recently to take advantage of an increase in maturing debt.Reports suggest that ANZ, Commonwealth Bank, Westpac and HBOS have all raised funds in recent days. As the recent rush is to make up for an increase in maturing debt, analysts predict that the jump in issuances will not last.
Michael Bush, National Australia Bank’s head of fixed-income credit research said that a large amount of maturing debt prompted issuers to appeal to investors that had spare cash and that it was a short term increase.
The traditional August holiday in the northern hemisphere also contributed to this week’s rush, spurring domestic banks to look towards the local market rather than foreign investors, Bush said.
Bank fundraising during the first half of the year and access to offshore markets means Australia’s banks could give less focus to the domestic market in the coming months, narrowing already tight supply.
Also, the global credit crunch is set to push non-financial corporates towards the cheaper option of securing financing through bank loans, rather than issuing bonds. Sales of corporate bonds in Australia this year have been wholly restricted to banks.
More than $2 billion of bank debt sold this week, outstripping $1.1 billion sold in all of July, underscoring firm investor appetite for Australia’s financials.
About $10 billion of government, corporate, state and supranational debt matured on Friday alone, including the last remaining Australian dollar bond sold by BHP Billiton in the public market.