From the AFR:
On Tuesday night, National Australia Bank raised $US4 billion ($5.4 billion) in the US bond market, one of the larger offshore debt raisings, which marked the first issuance by a big bank since the Brexit vote roiled global markets.
While NAB was said to have paid a “new issuance premium” above the equivalent rate of existing bonds to lure investors and compensate them for market uncertainty, the size of the deal demonstrated that funding markets remain open to big lenders.
…In this instance, NAB paid 100 basis points over the US Treasury rate for five-year bonds, and a 140-basis-point premium for the 10-year debt.
That, analysts said, equated to about 120 basis points over the Australian bank rate for the five-year debt and about 152 basis points for the 10-year debt. They estimated this was about 15 to 20 basis points above existing comparable bonds.
That is much more expensive than suggested by current CDS pricing which has 5 year bonds at 80bps. Looks like a little bit of the proverbial stacking of the acorns before the winter sets in.
Prudent.
