Goldman Sachs Extends Its Kangaroo Bond Curve After BofA Sale

Goldman Sachs Group Inc. is extending its bond curve in Australia out to 2021, offering notes a day after Bank of America Corp. sold A$1.1 billion ($1.03 billion) of securities due in March 2020.

The U.S. investment bank is marketing the seven-year Australian dollar securities to yield about 140 basis points more than swap rates, according to three people familiar with the matter who asked not to be identified because the terms aren’t set. The lender’s longest outstanding Kangaroo bonds are A$950 million of August 2019 securities that it sold in February of this year, according to data compiled by Bloomberg.

Domestic and foreign financial companies have issued about A$7.8 billion of notes in the market this month, with the U.S. borrowers joining banks including UBS AG and National Australia Bank Ltd. in raising funds, the data show. Bank of America, which carries the same credit rating as Goldman Sachs at Standard & Poor’s and is one level lower at Moody’s Investors Service, yesterday priced its 5 1/2-year securities at a spread of 115 basis points, or 1.15 percentage points.

Japan’s Sumitomo Mitsui Banking Corp. also raised A$400 million yesterday with a three-year note sale, while Australia & New Zealand Banking Group Ltd. priced A$400 million of April 2016 securities.

The 2019 fixed-rate notes sold by Goldman Sachs in February yield about 112 basis points more than the swap rate, according to ANZ prices. They were issued at a yield premium of 130 basis points.

Pricing on the current Goldman Sachs offering is expected tomorrow, according to a statement from Westpac Banking Corp., which is managing the sale alongside the issuer, Australia & New Zealand Banking Group Ltd., Commonwealth Bank of Australia, Goldman Sachs and Royal Bank of Canada.

Goldman Sachs is rated Baa1 by Moody’s, the eighth-highest credit score, and A- at S&P, the equivalent of one level higher.

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