BOQ also into bond market
(23 January 2009 – Australia) Bank of Queensland (BOQ) has followed the big four into the international bond market due to the demand for government guaranteed debt.
BOQ’s venture into overseas debt markets is primarily the result of the funding guarantee put in place by the Federal Government at the end of 2008.
The guarantee gives the AAA rating of the Australian Government to banks, and opens up an otherwise closed market, particularly for a lower rated bank such as BOQ.
BOQ raised A$500 million from selling three-year bonds in its first use of the guarantee.
The offer was oversubscribed by 40 percent, BOQ chief financial officer Ram Kangatharan, said, due to the demand in place for Commonwealth-guaranteed bonds.
Despite the guarantee, smaller banks are still paying more in the markets. BOQ's bonds will pay 115 basis points over swap rates.
Kangatharan said that even with the government guarantee, investors were looking at the underlying rating of the bond issuer.
Kangatharan also said that the deal allowed BOQ to increase its debt-profile maturity and the lender did not need to return to wholesale markets in 2009.
BOQ had been able to fund lending-growth via a jump in retail deposits, he said.
The guarantee gives the AAA rating of the Australian Government to banks, and opens up an otherwise closed market, particularly for a lower rated bank such as BOQ.
BOQ raised A$500 million from selling three-year bonds in its first use of the guarantee.
The offer was oversubscribed by 40 percent, BOQ chief financial officer Ram Kangatharan, said, due to the demand in place for Commonwealth-guaranteed bonds.
Despite the guarantee, smaller banks are still paying more in the markets. BOQ's bonds will pay 115 basis points over swap rates.
Kangatharan said that even with the government guarantee, investors were looking at the underlying rating of the bond issuer.
Kangatharan also said that the deal allowed BOQ to increase its debt-profile maturity and the lender did not need to return to wholesale markets in 2009.
BOQ had been able to fund lending-growth via a jump in retail deposits, he said.
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