Macquarie seizes on upbeat sentiment to lock in $3bn debt deal

Macquarie Group has tapped into the positive sentiment in global credit markets to raise $US2.5 billion ($3.3bn), its largest debt deal for nearly two years.

The US credit markets have been a standout this year, with nearly $US1.28 trillion raised.

Macquarie has a track record of carrying out overseas debt deals sporadically, and the decision to enter the credit markets overseas was driven by the current positive sentiment.

Australia’s major banks remain well regarded by overseas investors and their paper issuances are always in demand.

Macquarie’s deal was more than two times oversubscribed and was bought by Asian, European and US investors. The bank said the funds would be used in its normal business operations.

Macquarie was a joint lead manager on its own deal alongside Bank of America Merrill Lynch, JPMorgan, HSBC and Citigroup. The transaction was the largest for Macquarie since it raised the same amount in January last year.

The major Australian banks have been busy in the US dollar denominated markets this year as part of their annual funding programs. National Australia Bank started the process rolling in May when it raised $US3.5bn. CBA followed in September with a $US3bn deal, and ANZ raised $US2.75bn earlier this month.

The level of investment-grade credit issued in the US so far this year has already eclipsed the 2016 level with five weeks to go before the end of the year.

Analysts had forecast a subdued year for the US credit markets following Donald Trump’s election victory and interest rate uncertainty from the Federal Reserve.

However, the tone for the markets was set alight when $US88.6bn was issued for the first eight days of the current calendar year.

The upbeat tone has nevertheless endured and the US banks have been active lately. Goldman Sachs raised $US7bn in October; JPMorgan has tapped the markets for $US1.75bn in the past few weeks while HSBC raised $US1bn earlier this year.

Here, Firstmac — the non-bank mortgage lender — has mandated JPMorgan and Westpac to carry out the due diligence on an Australian dollar-yuan deal.