Short-dated bonds suit Australian banks
New issuance was seen in the domestic corporate bond market last week from Suncorp-Metway (rated A+ by S&P), GPT (A), Auswide Bank (BBB), the Sydney branch of Mizuho Bank (A) and the Province of British Columbia.Commonwealth Bank (AA-) tapped an existing line, while the supranational and agency sector was represented by Nederlandse Waterschapsbank (AAA), KfW (AAA) and Rentenbank (AAA).The Sydney branch of Mizuho Bank and GPT got the week underway with a A$600 million, three year FRN issue and a A$150 million ten year bond issue, respectively.Mizuho priced the FRNs at 110 basis points over bank bills and the issue marks the bank's return to the market after its debut in May last year.GPT hasn't been seen in the market for two years and this latest issue is its first ten year issue since August 2003. Back then the company had an A+ credit rating and ten year funding priced at 78 bps over bank bills/swap. Last week's issue priced at 168 bps over swap.Auswide Bank quietly placed (as is its practice) A$25 million for one year, at a margin of 90 bps over bank bills.Suncorp-Metway sold A$350 million of ten year covered bonds and paid 135 bps over swap. This follows a $500 million, five year issue of covered FRNs undertaken in June. The FRNs priced at 110 bps over bank bills.The bank also sold A$200 million of one year and the same again of two year FRNs. The notes were priced at 60 bps and 88 bps over bank bills.Lastly, the Canadian Province of British Columbia (AAA) returned to the market for just the third time since May 2014, to sell A$100 million of 10.5 year bonds. The bonds were sold at a margin of 67.25 bps over CGS to yield 2.5825 per cent per annum.Commonwealth Bank added A$250 million to the A$500 million of 16 August 2017 FRNs sold the week before. This follows the A$500 million of 2 August 2017 FRNs sold on July 20, to which the bank added another A$500 million a week later.A trend seems to be developing here which may reflect the regulatory change which has made accessing US money market funds much more difficult. This was a favourite source of short term funding for the bank, and Westpac in particular. ANZ and NAB were less frequent users of that market.Nederlandse Waterschapsbank added A$40 million to its September 2026 line. The increase was priced at 86.25 bps over CGS, and takes the size of the line to A$340 million.KFW and Rentenbank added A$150 million and A$50 million to their September 2026 and May 2026 lines, respectively. The increases were priced at 60.5 bps and 51.5 bps over CGS, and take the size of each line to A$500 million and A$705 million.Lastly, Adani Abbot Point Terminal Pty Ltd (BBB) announced that it had accepted tenders for A$62.9 million of the $75 million of its November 2018 bonds that it had sought to buy back. However, AAPT remains interested in buying more bonds up