YieldReport has referred to the preference of corporates to issue FRNs in several articles recently, the most recent being an issue by Bendigo & Adelaide Bank. Now National Australia Bank has announced it will be issuing a new benchmark 5 year FRN. The last time it issued a bond of this type was in late October when it sold $2.1 billion worth at 3m BBSW + 108bps. This time around it has given guidance in the 3m BBSW + 118bps region which, coincidentally, is the same price at which ANZ issued its 5 year benchmark FRNs in early April.
There has been a plethora of 5 year FRNs issued in the last month. Just over a week ago, Citigroup issued $600 million at 3m BBSW + 155bps, towards the middle of April Bendigo issued $650 million worth at 3m BBSW + 146bps, in early April Suncorp issued $600 million at 3m BBSW + 138bps and then there was the ANZ one referred to previously.
If the guidance is any good, and it should be given this is a “self-led” deal, the 118bps margin indicates things have got a bit more expensive for the banks since NAB‘s last 5 year FRN sale. Back in October 2015, it issued $2.1 billion worth at BBSW +108bps. 0.1% may not sound like much but for every $1 billion that’s $1 million in extra interest per year.