Bendigo & Adelaide Bank has joined the floating rate debt trend that has become evident in recent months. The Bank has raised $650 million at BBSW + 146bps, in line with the 145-148 bps guidance investors were given prior to the sale but way in excess of the BBSW + 110bps payable on bonds issued in a similar transaction in mid-August of last year. Margins over BBSW have gone up since October 2015 when Commonwealth Bank paid BBSW + 78bps for a 3y FRN. Recently CBA paid BBSW + 98bps, which is a 20 bps spread blowout but Bendigo’s latest bond sale represents a 36bp blowout. Debt pricing would appear to be getting tougher for banks which is likely to lead to higher non-bank debt pricing.
CBA’s $2billion worth of FRNs at BBSW + 98bps this week followed Suncorp-Metway’s 3 year FRN as part of a two tranche deal which raised $750 million ($600 million fixed, $150 million floating). In the last week of March NAB issued $2 billion worth of FRNs.