Westpac has once again tapped the bond market, attracting $3.64bn worth of demand in what is a sure sign of the demand for yield amongst investors in the rising interest rate environment.
The order book closed on Monday at 2pm AEST and the bank will determine the total amount to be issued by close of business.
On offer is a ten-year bond with a non-call five-year period, which attracted $1.87bn of demand from those wanting a floating rate and $445m wanting a fixed rate.
The price is set at 230 basis points above the three-month Bank Bill Swap Rate, which is about 4.2 per cent.
Also, a 15-year bond with a ten-year non call period, which has attracted $1.3bn of demand, and is priced at 260 basis points above BBSW, yielding 6.949 per cent.
The bond was launched on Monday morning.
Market experts say that the demand has revealed the level of liquidity in the Australian bond market, which has attracted global groups in recent days like Singapore bank DBS.
DBS issued $1bn worth of bonds for three years at 70 basis points above the Bank Bill Swap Rate.
Major Australia banks like Westpac need to issue vast amounts of debt annually as their funding books grow and as they replace funds for previous issues maturing.
Westpac has another bond due this week.
It’s never been a better time for bond investors – only a few years ago during the pandemic they would have received a return of about 2.5 per cent, but that has shifted to above 4.2 per cent as the Reserve Bank of Australia continues to increase rates.
Healthscope firmly in the sights of Bain
Bain Capital is closing in on its next big target struggling with too much debt – the country’s second-largest hospital operator Healthscope.
Incitec Pivot’s fertiliser price likely too high for some
Potential bidders have been given information about Incitec Pivot’s fertiliser unit, but the jury’s still out as to how much they will be prepared to pay..