Commonwealth Bank must have noticed the ease at which Westpac put to bed over $2 billion worth of bonds in a day earlier this week, because it decided to up the ante and issue three tranches of bonds into the US market for a collective USD$2.5 billion (AUD$3.361 billion). There were two 3 year tranches; one fixed and one floating, each worth USD$750 million and priced at Swap/US Libor + 106bps. The third 5 year fixed-rate tranche was worth USD$1 billion and priced at Swap + 133bps.
Commonwealth had a similarly structured three tranche USD transaction in late October 2015, made up of two 3 year tranches (one fixed, one floating) and a five year fixed-rate tranche. A quick comparison of the two bond sales indicates a higher price is being paid for this latest issue. While investor demand is there for large value bond issues, Commonwealth is paying a premium this time around of between 25bps-29bps over the October tranches.
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