Demand soars for CBA bond issue

Picture: Sarah Marshall/NCA NewsWire

CBA has returned to the bond market to raise more funds to appease regulators and has attracted $6bn worth of demand.

The bank has attracted $2.9bn for its three-year offer, with 59 per cent floating and the remainder fixed, and $3.1bn for its five-year offer, 64 per cent floating and the remainder fixed.

The price has been set at 80 basis points above the three-month bank bill swap rate for its 3-year raise that offers a 4.2 per cent yield on the fixed tranche.

It is 102 basis points above the three-month bank bill swap rate for the five-year offering, which produces a 4.47 per cent yield on the fixed tranche.

The CBA has allocated $1.2bn for the three-year floating bond, $1bn for the three year fixed bond, $1.4bn for the five-year floating bond and $900m for the five year fixed.

The book build for the raise closed at 1.30pm Wednesday AEST.

Last week, ANZ Bank raised $1.75bn from the bond market after attracting $3bn of demand.

Of the $1.75bn raised, $1.45bn was at a fixed rate and $300m was at a floating rate 270 basis points above the three month Bank Bill Swap Rate.

The Tier 2 wholesale subordinated debt deal has been priced at 2.8 per cent above the three-month Bank Bill Swap Rate with an indicative fixed yield of 5.986 per cent.

In the past fortnight, NAB attracted $2.8bn of demand for its $1.25bn bond raising.

The strong attraction was its high yield – 6.32 per cent – and the fact that the offering was from a good quality institution.

CBA had earlier issued a bond to secure additional regulatory capital, as did Macquarie, with fixed and floating rates.

In both cases, the fixed rate proved to be popular.