First corporate bond issue of 2009

Australia's moribund corporate bond market showed signs of life yesterday when Australia Post launched a medium-term note issue.

The issue will price later this week but the joint lead managers, ANZ and Commonwealth Bank, are confident that pricing will be around 130 basis points over the bank bill swap rate.

The notes have a five-year term and are rated AAA, making Australia Post an unusual issuer in the corporate bond market, which is usually populated by issuers with A and BBB ratings.

Head of debt capital markets at ANZ, Alison Gray, said the deal opens the corporate bond market.

Gray said: "I think we will see more issuance. Investors are looking at that sector.

"At the moment all investors are getting is government guaranteed bank paper. They are looking for diversification across their portfolios and I think they want more corporates to issue.

"What will motivate the corporate to look at the bond market is the fact that the syndicated market has slowed as a result of the withdrawal of some foreign banks."

Australia Post has a note issue maturing and wanted to refinance using the same type of funding.