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JP Morgan To Issue Kangaroo Bond
JP Morgan says it intends to be the first Wall Street bank to issue Kangaroo bonds since Lehman Brothers collapsed in 2008.
Kangaroo bonds are bonds denominated in Australian dollars and primarily sold to Australian investors, though in reality anyone who has Australian dollars can buy the bonds.
According to Bloomberg JP Morgan is planning a deal comprised of both fixed an floating rate tranches at a rate of 130 basis points over the swap rate.
The last time JP Morgan issued a Kangaroo bond, it did a $950 million deal in 2007, paying just 20 basis points over the swap rate.
All of Wall Street’s major firms including Merrill Lynch, Morgan Stanley, Citigroup and Bank of America were active issuers in the Kangaroo market in 2007 prior to the collapse of Lehman Brothers in 2008.
Lehman Brothers collapse caused investors to shun all but the very safest government debt.
Prior to the JP Morgan issue only supranational and state backed issuers such as the World Bank have been able to do Kangaroo deals according to Bloomberg.
JPMorgan is planning a benchmark-size sale, according to its statement, which typically means at least $500 million. Spokesman Andrew Donohoe declined to comment on the sale.
Kreditanstalt fuer Wiederaufbau, Germany’s AAA rated state- owned development bank, priced $250 million of kangaroo notes to yield 0.4 percentage point more than the swap rate on Feb. 22, a person familiar with the transaction said, less than one third of the spread JP Morgan is offering.
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