Westpac May Double Sales of Structured Notes on Rising Rate Bet

Westpac Banking Corp. predicts sales of structured notes through its special purpose vehicle will double on an expected interest rate rise in Australia.

Total issuance by the lender’s Westpac Global Capital Markets unit will grow to A$1 billion ($929 million) over the next two to three years from about A$500 million currently, David Van Ryn, the head of capital markets solutions said. The entity began issuing structured notes in 2006.

“Our volume is influenced by interest rates,” said Van Ryn, who oversees the unit’s structured note issuance. “In the current rising yield environment we’re expecting, issuance is likely to increase as investors search for yield.”

Swap traders are betting the Reserve Bank of Australia will increase its benchmark rate by 15 basis points over the next year, according to a Credit Suisse Group AG index. The RBA’s cash rate is at a record low 2.5 percent.

Most of the notes sold by the bank since last year have been through its global capital markets entity, according to data compiled by Bloomberg. The bank began selling structured notes via the unit in Asia, Europe and New Zealand less than a year ago, Van Ryn said.

The unit is currently in the process of selling two five-year notes which settle April 17. They’re linked to a basket of credits made up mostly of Australian banks, data compiled by Bloomberg show.

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