Westfield and Foxtel tap US debt market

In what was effectively the last week of the month, issuance activity in the debt capital market last week was mostly offshore and mostly in the US. As of the close of business on Friday, offshore issuance by Australian borrowers totalled the equivalent of only A$5.9 billion, a long way short of the A$21 billion of issuance seen in July - the Australian banks accounted for 94 per cent of that.

Westpac and Westfield were the two prominent issuers in the 144A market last week. Westpac raised US$1.5 billion in a single tranche, 5.5 year issue, priced at 175 basis points over US Treasuries.

Westfield (rated A minus) undertook a two tranche issue, raising US$750 million for six years at 350 bps over US Treasuries and US1.25 billion for ten years, at the same 350bps over. Yields on the two tranches came in at 5.95 per cent and 6.93 per cent, respectively.

If these funds were swapped back into Australian dollars, the pricing would equate to around 330 bps over bank bills in each case, after allowing for the basis swaps.

Reuters reported that pay TV provider, Foxtel, completed a private placement in the Reg D market in the US. The reported pricing of the placement looks very good against the Westfield deal, especially given that Foxtel is not rated, but was assessed for the purposes of that market, as being a NAIC-2 issuer (a requirement of the US insurance regulator, and roughly equivalent to a 'BBB+' rating).

Foxtel issued three tranches: US$31 million for five years, at 250 bps over Treasuries; US$74 million for seven years at 265 bps over; and again at 265bps over, US$75 million for ten years.

The other offshore issuer for the week was once more the Australian branch of Rabobank, with another A$50 million addition to its April 2014 EMTN. When fungible, this will take outstandings to A$525 million.