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Australia Bank Bonds Punished on Bubble Concern: Credit Markets

Investors in U.S. dollar-denominated bonds issued by Australian banks are demanding higher relative yields on concern the country’s property market is overheating.

The spread between Australia & New Zealand Banking Group Ltd.’s $500 million of 2.4 percent three-year notes and similar-maturity Treasuries widened to 109 basis points from an 87.5 basis-point issue price in January, according to Royal Bank of Scotland Group Plc. The cost of credit-default swaps tied to Melbourne-based ANZ and its three largest peers jumped at least 71 percent since the sale, outpacing the benchmark Australia Markit iTraxx index’s 55 percent increase, CMA prices show.