Westpac raises funds
(17 November 2009 – Australia) Westpac has been the first bank in three months to raise funds using the backing of the Federal Government’s credit rating, despite calls from regulators to start weaning themselves off the guarantee.
The A$1.1 billion raising from local investors is a change in trend as Australian banks have generally been raising funds without the guarantee that gives them access to the Federal Government’s AAA credit rating.
The five year bonds were issued at a margin of 30 basis points.
Westpac also raised A$1.4 million for seven years at a margin of 130 basis points over bank bill swap rate.
Philip Bayley, a bond market analyst with ADCM Services, warned that the use of the government guarantee could mark a setback for the return to normal conditions across the domestic corporate bond market.
It also means it will be some time yet before the regional banks and smaller authorised deposit-taking institutions will be able to issue unguaranteed debt of their own, Mr Bayley added.
The five year bonds were issued at a margin of 30 basis points.
Westpac also raised A$1.4 million for seven years at a margin of 130 basis points over bank bill swap rate.
Philip Bayley, a bond market analyst with ADCM Services, warned that the use of the government guarantee could mark a setback for the return to normal conditions across the domestic corporate bond market.
It also means it will be some time yet before the regional banks and smaller authorised deposit-taking institutions will be able to issue unguaranteed debt of their own, Mr Bayley added.
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