ANZ & Westpac Set To Issue Sovereign Backed Samurai Bonds

Post by Sharat on January 8, 2009 · Under Capital Markets, banking, news · Comment 

Two of Australia’s big four lenders have plans to issue sovereign backed Samurai bonds according to a report by the Reuters news agency which cited market sources. The report suggests that Westpac and ANZ both intend to come to market with  Samurai issues and have mandated Daiwa, Nikko Citigroup and Nomura to manage the bond sales. A Samurai bonds is Japanese Yen denominated debt sold by overseas issuers in Japan.

Westpac is said to be the first borrower to come to market with an issue scheduled to occur later this month, which would then be followed by ANZ in February. Australian lenders have to date raised nearly US$ 27 billion in sovereign backed debt since the guarantee first became effective in December.

NAB raised US$ 2.5 billion this week and there are concerns that there may be an oversupply of US and Australian Dollar denominated paper in the market which has resulted in borrowers looking at other currencies to issue their debt in. The report also suggested that Suncorp- Metway was looking at doing 5 year Sterling deal for funding.

Currently there has not been a sovereign backed Samurai Bond issue because the currency was initially excluded from the Federal Government Guarantee. Australian Sovereign guaranteed debt is rated triple A by the major credit ratings agencies, and investors find the asset class attractive, because a large number of issuers has meant that interest rates have been pushed up as borrowers compete for investors, allowing investors to benefit from an increase in yield with no real additional risk.

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