Barclays Plans to Sell Australian Bonds After Three-Year Hiatus

Barclays Plc, the U.K.’s second-largest bank by assets, is selling its first bond in Australia in more than three years.

The British lender’s local branch is marketing five-year Australian dollar-denominated notes at a yield of about 115 basis points more than swap rates, according to two people familiar with the matter who asked not to be identified because the terms aren’t set.

The London-based bank last sold bonds in Australia in February 2011, when it issued A$1.5 billion ($1.4 billion) of three-year securities, according to data compiled by Bloomberg. Goldman Sachs Group Inc., which carries the same credit rating as Barclays at Standard & Poor’s and is ranked one level lower at Moody’s Investors Service, last month priced a five-year Aussie dollar transaction at a spread of 130 basis points.

Barclays has the equivalent of some $167 billion of bonds outstanding globally with a weighted average maturity of about 6 1/2 years, according to data compiled by Bloomberg. It carries a credit score of A3 at Moody’s, the seventh-highest ranking, and an equivalent A- at S&P.

The lender is in the process of eliminating as many as 12,000 jobs this year, including more than 800 senior bankers, after profit tumbled in the fourth quarter. Adjusted pretax earnings fell to 191 million pounds ($317 million) in the three-month period ended Dec. 31 from 1.4 billion pounds a year earlier, it said in February.

The average yield premium over swap rates for financial company bonds in Australia fell to 93 basis points yesterday, a level unseen since February 2008, according to a Bank of America Merrill Lynch index. The gap has narrowed from as much as 226 basis points in May 2012.

The new Barclays transaction may include fixed- and floating-rate notes and is expected to price by the end of the week, the people familiar said. The deal is being managed by Barclays itself, along with Australia & New Zealand Banking Group Ltd., Commonwealth Bank of Australia, National Australia Bank Ltd. and Westpac Banking Corp., the people said.

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