CBA Plans Dollar Bonds After Least Australian Sales Since 2011Rachel Evans
Commonwealth Bank of Australia is planning a sale of dollar-denominated notes after the slowest month for offerings from the nation since 2011. Debt risk rose.
CBA, the nation’s largest bank, may sell the debt in the “near future,” subject to market conditions, according to an e-mailed statement from Goldman Sachs Group Inc., which is helping to manage the sale. The cost of insuring bonds in the Asia-Pacific region against non-payment rose, with the Markit iTraxx Australia gauge of corporate debt risk on track for its highest close since Feb. 7, credit-default swap traders said.
Issuers from Australia sold just $30 million of notes denominated in the U.S. currency last month, the least since December 2011, according to data compiled by Bloomberg. The nation’s banks instead sought support from domestic investors, raising A$3.91 billion ($3.49 billion) from sales of residential mortgage-backed securities, the busiest month for such issues since September.
“There’s been a lot of supply here and the banks will always be looking to diversify and hit other areas,” said Sydney-based Brendon Cooper, a director of credit strategy at Westpac Banking Corp. “There’s obviously a little bit of global volatility at the moment so that could quieten things down in the short term but, more broadly speaking, I don’t see why issuers wouldn’t be looking at the U.S.”
CBA last sold U.S. currency bonds to global investors in December when it raised $1.5 billion via 1.875 percent notes due 2018, according to data compiled by Bloomberg. The notes are now trading at a yield of 1.907 percent.
The Markit iTraxx Australia index climbed 1.5 basis points to 103.5 basis points as of 3:34 p.m. in Sydney, National Australia Bank Ltd. prices show.
U.S. Secretary of State John Kerry travels to Ukraine today after Russian President Vladimir Putin got lawmakers’ approval for troop deployments. European Union foreign ministers will hold an emergency meeting, while the U.S. warned of possible sanctions against Russia.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan rose 2.5 basis points to 135.5 as of 12:34 p.m. in Hong Kong, Standard Chartered Plc prices show. The gauge is set for its first daily advance in a week, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
The Markit iTraxx Japan index increased 3.5 basis points to 80 basis points as of 1:37 p.m. in Tokyo, Citigroup Inc. prices show. The measure is on track for its highest close since Feb. 18, according to CMA.
Credit-default swap indexes are benchmarks for insuring bonds against default and traders use them to speculate on credit quality. A drop signals improving perceptions of creditworthiness, while an increase suggests the opposite.
The swap contracts pay the buyer face value in exchange for the underlying securities if a borrower fails to meet its debt agreements.