Fast start to 2009 funding
As expected, the major banks moved quickly to continue to fill their 2009 funding requirements, issuing as much as $14.3 billion of bonds last week. The banks issued only $8.7 billion of bonds in the same week last year and that was considered a busy week at the time.Commonwealth Bank led the issuance race, selling approximately $4.75 billion of bonds, spread across four issues. The bank also set new, post-government guarantee, pricing benchmarks for bonds sold in the US s144A market.CBA priced US$2.5 billion of three-year bonds at a spread of 78 basis points to mid-swaps. This compares well with the 100 bps Westpac and ANZ paid just a month ago and even with their subsequent top-ups at 90 bps. Earlier in the week, nab also raised US$2.5 billion of three-year funds in the s144A market but at a spread of 85 bps to mid-swaps.Commonwealth also became the first of the four major banks to issue five-year paper in the same market and priced US$575 million of FRNs at 105 bps over Libor. On our estimates, one of the major banks would have had to pay 130 bps over, if they had raised five-year funds when they first tapped the s144A market in December. To cap things off, CBA raised HK$220 million (approximately $40 million) for three years and 300 million Swiss francs (approximately $370 million) for 4.25 years off its Euro medium-term note program.ANZ sold almost $4.1 billion of bonds during the week. It set a new record for the largest single issue in the domestic market, pricing $2.6 billion of five-year bonds ($1.5 billion fixed and $1.1 billion floating) at 110 bps over bank bills/swap. Again the pricing compares well with the 120 bps that was being paid for five-year funds last month. In addition, $650 million of three-year bonds were priced at 85 bps over bank bills. ANZ also priced 200 million Swiss francs of March 2013 bonds and US$370 million of April 2012 floating rate notes, paying a coupon of Libor plus 88 bps, off its Euro MTN program.Apart from its s144A market raising, National Australia Bank added $500 million to its recent December 2013 domestic issue, at a spread of 110 bps to swap. NAB originally issued $1.8 billion of the bonds in December at 120 bps over swap. NAB also raised HK$200 million for three years.Westpac issued a S$21 million zero coupon bond with a five-year term to maturity, early in the week. The bond, which was apparently issued without a government guarantee, should have a value of S$25 million upon maturity. Westpac also priced HK$430 million of January 2012 bonds and 200 million Swiss francs of February 2014 bonds. Both issues carry government guarantees.Finally, Suncorp-Metway finished the week with a £550 million, five-year, bond issue on Friday night our time. The bonds were priced at 105 bps over mid-swaps (with a government guarantee) but will swap back to Australian dollars at a level somewhat wider than that, after the very wide basis