CBA fills up on guaranteed, offshore debt

Offshore, the CBA visited the US s144A market again, this time with a US$2.75 billion government guaranteed bond issue, to take its total issuance in that market to the equivalent of A$18.1 billion, this year. The CBA issued US$1.5 billion of fixed rate and A$1.25 billion of floating rate notes with a five-year term to maturity and priced at 28 basis points over swap/Libor.

This pricing is not particularly cheap when, say, 15 bps is added for the basis swap back to Australian dollars and then the 70 bps guarantee fee needs to be added too. This gives a total Australian dollar equivalent credit spread of 112 bps. The domestic benchmark for five-year funds is now 96 bps, as discussed above.

But with Westpac having raised US$3.5 billion of five-year funds in the same market just the week before, the advantage that the market has, is that it allows debt to be raised in significant volume.   

But could we be seeing something of an issuance rush - ahead of an announcement of changes to the government guarantee?

As for other offshore issuance last week, Rabobank Australia added A$75 million to its July 2012 line, to take outstandings to A$425 million, and further details came out on Westpac's upcoming Uridashi issue. Westpac will sell NZ$58 million of four-year bonds on Thursday. The bonds will pay a coupon of 4.79 per cent.