WATC bucks trend, goes for fixed rate

19 April 2016

Despite what had appeared to be a preference for floating rate bond issues, WATC has just issued $1.1 billion of October 2022 fixed rated bonds. This new line of bonds is intended to be a benchmark series and therefore liquidity will be supported in secondary markets. Pricing was at the higher end of the 52-56bps indicative range with the final price set at ACGB + 55bps.  Bids in excess of $1.5 billion were received but in comparison with WATC’s previous FRN issue where pricing was at the lower end, the coverage ratio was considerably lower. This may be another symptom of the domestic bond market’s recent preference for floating rate issues rather than fixed rate ones, although the Federal Government still seems to have no trouble in issuing $2 billion worth of fixed rate bonds in any given week.