ANZ bond rush adds to lower funding cost speculation
(20 March 2012 – Australia) Funding costs could be dropping for Australian banks amid signs that strains on global money markets are easing.
ANZ had a huge A$3 billion covered bond issue as priced late last Friday, the four-year funding issue was rushed by institutional investors, pushing pricing 95 basis points over the benchmark swap rate.
The issue marks the first four-year covered bond issued by an Australian bank into domestic or offshore markets and is also among the tightest pricing.
The bond issue follows a restructure of Greece’s debt and a massive injection of funds by the European Central Bank into the region's banking system.
At the start of the year Commonwealth Bank (CBA) paid a hefty 175 basis points for a A$3.5 billion covered bond issue. The five year issue marked some of the highest costs paid by a major bank for funding in more than 15 years.
"While of shorter maturity than all other Australian bank covereds, the pricing (of ANZ's bond) was such as to indicate a very substantial tightening in covered bond spreads," National Australia Bank’s head of credit research Michael Bush told The Sydney Morning Herald.
The latest issue by ANZ takes the total domestic bond issues for March to A$11 billion.
This puts March within reach of breaking the monthly issuance record of A$15.98 billion set in March two years ago, according to figures compiled by ADCM Services.
The issue marks the first four-year covered bond issued by an Australian bank into domestic or offshore markets and is also among the tightest pricing.
The bond issue follows a restructure of Greece’s debt and a massive injection of funds by the European Central Bank into the region's banking system.
At the start of the year Commonwealth Bank (CBA) paid a hefty 175 basis points for a A$3.5 billion covered bond issue. The five year issue marked some of the highest costs paid by a major bank for funding in more than 15 years.
"While of shorter maturity than all other Australian bank covereds, the pricing (of ANZ's bond) was such as to indicate a very substantial tightening in covered bond spreads," National Australia Bank’s head of credit research Michael Bush told The Sydney Morning Herald.
The latest issue by ANZ takes the total domestic bond issues for March to A$11 billion.
This puts March within reach of breaking the monthly issuance record of A$15.98 billion set in March two years ago, according to figures compiled by ADCM Services.
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