Bank credit preferred
As alluded to above, Westpac privately placed a A$750 million top-up of its April 2013 FRNs two weeks ago, taking outstandings to over A$2.0 billion. According to KangaNews last week, market sources say the top-up was priced at just 83 basis points over bank bills. If this is accurate, it is a very good outcome for Westpac as the margin is just 7 bps wide of the pricing of the first tranche in April, at 76 bps over. However, pointing to a recent widening of credit spreads generally, the A$66.5 million, 'AAA' rated, Class A tranche of the Liberty Series 2010-1 Auto Trust ABS issue was priced last week at 170 bps over bank bills. The notes have a weighted average life of just 0.88 years.This does not compare well with the pricing on the A$221 million, 'AAA' rated, Class A notes issued by Impala Series No.1 2010-1 Trust three weeks earlier. These notes had a 2.6-year weighted average life and priced at 165 bps over bank bills.The banks were more active in international markets last week. Westpac raised A$411 million for 18 months in the US s144A market at Libor plus 25 bps. National Australia Bank did the same, raising US$250 million. Later in the week, Westpac issued A$500 million of 13-month extendible CP, at just Libor plus 2 bps.ANZ followed on Friday night with a straight one-year s144A issue, raising US$300 million at Libor plus 2 bps. It also raised CHF325 million in the Euromarket for six years at mid-swaps plus 60 bps: presumably the Swiss franc, Australian dollar basis swap was favourable. The CBA also raised US$70 million for one year in the Euromarket at Libor plus 2 bps.As for longer-dated issuance, ANZ and Westpac raised US$10 million each in the US s144A market for five years, over the last two weeks. The issues were priced at Libor plus 80 bps, which would swap back into Australian dollars at around 110 bps over, suggesting that the price of five-year debt for the banks has only moved a little from the 100 bps achievable in April.Finally, all four majors have placed parcels of bonds ranging from A$15 million to A$25 million for ten years in the Euromarket. Yields have ranged from 6.86 per cent to 7.38 per cent, equating to margins of approximately 100 bps to 150 bps over the ten-year swap rate.