Corporate issuers were thin on the ground in the weeks before the UK EU vote but now the vote is out of the way and despite some lingering uncertainty, issuers have returned. If NAB’s latest bond sale is indicative of conditions, then conditions are basically back to normal, even though some commentators have suggested spreads have widened.
NAB was one of two of the major banks which completed large bond sales this week. It issued USD$4 billion of bonds via four tranches of fixed and floating bonds to investors in the US market. The tranches comprised 3 year bonds priced at Treasurys + 85 bps, 10 year bonds at Treasurys + 122 bps, 5 year fixed-rate bonds at Treasurys + 100 bps and 5 year floating-rate bonds at US Libor + 100 bps. By all accounts, the issue was well bid, with around $10 billion of orders, so there was no shortage of investor interest.
Margins may have risen a little in the last few months but not in any substantial manner. In May ANZ issued 5 year fixed and floating bonds into the US market. The fixed-rate bonds were issued at Treasurys + 95bps, while the floating-rate notes were done at Libor + 99bps, so while NAB’s latest offering may be a tad more expensive, it may be a little bit of a stretch to suggest margins have widened noticeably. Coincidentally, a similar package of 3 year and 5 year bonds NAB issued in July last year was priced at identical spreads to Treasurys, only in that case there was no 10 year bond tranche.