CBA preps tier two bond

Commonwealth Bank advised on Friday that it would meet with investors in Sydney tomorrow and in Melbourne on Wednesday to discuss a possible tier two capital issue.   

If the CBA proceeds, it will become the sixth financial institution to issue Basel III compliant tier two capital in the wholesale market this year.   

Among the major banks, Westpac sold A$1 billion of Tier 2 capital at a margin of 205 basis points over bills in March.

ANZ followed with a A$750 million issue in June, with a spread of 193 bps.

Yieldbroker had the issues priced at 181 bps and 181.5 bps respectively, late last week.

There was no further news on the anticipated debut of the Local Government Funding Vehicle.

Led by the Municipal Association of Victoria, 30 of Victoria's 79 councils have subscribed to the new funding concept, which will create Australia's first bond issue backed by local government loans. The debt issue will seek to raise a minimum of $200 million.