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Australian Banks Increase Size of US Dollar Bond Issues
Australian banking majors Westpac and ANZ both of whom took advantage of the Sovereign guarantee for the first time last week by raising US dollar bond issues increased the size of their issues in a bid to strengthen balance sheets.
Westpac increased the size of its initial US$ 1.5 billion issue by a further US$ 400 million, raising a total of US$ 1.9 billion in federally backed US dollar denominated debt. ANZ on the other hand increased the size of its issue by US$ 300 million, raising a total of US$ 2.05 billion so far. The Australian lender may increase the size of the issue by another US$ 50 million on Wednesday.
Pricing on the upsize for Westpac has yet to be finalised and details will emerge later this week. ANZ increased its three-year fixed rate notes by $US100 million, priced at 91 basis points over mid swaps. The original deal priced at 100 basis points over mid swaps. The bank increased its two-year floating rate notes by US$250 million, at 70 basis points over mid swaps, in line with the original offering.
Last week Macquarie Bank raised US$ 1.7 billion and increased the size of that issue by a further US$ 400 million on Friday. A total of US$ 10 billion in sovereign backed US dollar denominated debt has been raised by Australian banks so far.
Banks worldwide including Australian lenders are keen to test credit markets with sovereign backed paper after they froze completely in mid September. In fact there have been so many issues that have come to market recently that the sovereign guarantees have had the perverse effect of actually raising funding costs somewhat as issuers compete for investors simultaneously. There have been concerns that credit markets are still too fragile and may not be able to absorb such an large influx of new issues.
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