* Westpac and NAB tap US market for first bond sales of 2017
By John Weavers and Mike Gambale
SYDNEY, Jan 9 (IFR) - Two Australian major banks overcame
intense competition last week to access the buoyant US dollar
bond market, where investors lapped up the latest offerings from
the country's well-regarded Double A rated issuers.
The Big Four like to open the year strongly and stay well
ahead of the run rate in light of their substantial wholesale
For annual bond funding, Commonwealth Bank of Australia
and Westpac have needs of around A$30 billion
($21.6 billion) equivalent, while National Australia Bank
has issued A$25-$30 billion and ANZ has raised
Up to two thirds of these totals are raised offshore, mainly
in the deep US dollar and euro markets, reflecting the
shallowness of the local bond scene, as well as Australians'
relatively low bank deposit holdings.
Westpac (Aa2/AA-/AA-) was one of six international banks to
issue US dollar bonds on the first trading day of 2017, with a
US$1.75 billion sale of dual-tranche five-year senior unsecured
SEC registered notes. The arrangers were Bank of America Merrill
Lynch and HSBC.
The $1.25 billion 2.8 percent January 11 2022s attracted an
order book of $3 billion and priced 88bp wide of Treasuries,
well inside 105bp area initial price thoughts, for a 4bp
new-issue concession over Westpac's 2.0 percent August 2021s.
The $500 million floating-rate notes were three times
oversubscribed and priced at three-month Libor plus 85bp.
Westpac is the only Australian major with SEC registration
rights, meaning it can issue bonds off its global medium-term
notes programme and attract a wider pool of offshore investors.
Identically rated NAB followed a day later with a hefty
US$3.5 billion sale of five-piece senior unsecured 144A/Reg S
bonds on the US high-grade market's busiest day since May 2016.
Citigroup, Morgan Stanley, NAB and RBC were joint leads on the
The $1 billion 2.25 percent three-year, the $1 billion 2.8
percent five-year and the $750 million 3.5 percent 10-year
fixed-rate tranches priced 78bp, 90bp and 108bp wide of
Treasuries versus 90bp area, 105bp area and 120bp area initial
price thoughts, respectively.
The $250 million three-year and $500 million five-year
floating-rate notes priced at three-month Libor plus 59bp and
NAB's trade secured a combined order book of $6.7 billion, while
the new issue concessions were seen at 3bp, 2bp and 4bp for the
bonds of three, five and 10 years, respectively.
The five-year notes swapped back into Australian dollars at
around 115bp over the bank bill swap rate (BBSW) benchmark, in
line with the current clearing rate for new major bank five-year
paper in the domestic market.
The three-year swapped back about 78bp wide of BBSW, 10bp or
so inside the highs 80s local three-year clearing rate. The
better pricing available in the US for shorter-dated paper
largely reflects the relative flatness of the Australian curve.
NAB paid 2bp more than Westpac's five-year Global, as the
former continues to suffer, at the margin, from historical
difficulties, including its ill-fated purchase of Clydesdale
The next day NAB crossed the Atlantic to issue a 300 million
Swiss france ($297 million) 0.30 percent 8.75-year (October 31
2025) note at mid-swaps plus 21bp.
Also on Thursday CBA kicked off its 2017 issuance programme
in the UK where it took advantage of the sterling covered
market's compelling pricing levels.
HSBC, Nomura and CBA were joint leads for the 1.125 percent
short five-year (December 22 2021) Eurobond offering that
exceeded £250-£300 million size expectations with a £350 million
($434 million) print.
The notes priced in line with Gilts plus 67bp guidance,
inside both the bank's US dollar curve and euro covered curves.
Meanwhile, ANZ is targeting the Japanese market to issue its
first bonds of the year with Mitsubishi UFJ Morgan Stanley and
Mizuho Securities mandated for seven-year Samurai notes, which
are being marketed at 11bp-13bp over yen offer-side swaps. Other
tranches may be added to the issue, which will price as early as
(Reporting by John Weavers; editing by Daniel Stanton and