After CBA’s $5 Billion Jumbo Deal, Westpac Prepares for a Eurobond Sale

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Westpac will join the Commonwealth Bank of Australia (CBA) in a busy month of debt capital markets fundraising, with its own senior euro-denominated bond deal set to debut as early as Wednesday.

The latest offering from Westpac follows CBA’s successful $5 billion jumbo bond issue last week. It comes amid a recovery in the Australian dollar, which has increased the attractiveness of Australian debt for foreign investors. The bank is planning to issue between €500 million and €1 billion worth of bonds, which could prove to be one of the most prominent euro-denominated bond issues by an Australian bank in recent years.

The bonds are expected to have maturities of different ranges, which will help fund Westpac’s operations and assist with liquidity management. Analysts say, “Westpac may be able to secure more favourable terms than what CBA achieved last week thanks to increasing demand for higher-yielding debt, driven by record low-interest rates across Europe and Asia.”

According to reports, the securities are expected to pay higher yields relative to other similarly rated European banks, making them particularly attractive for international and domestic investors looking for yield opportunities. The bonds are also likely to offer more significant diversification benefits because their issuer is domiciled outside Europe.

The success of Westpac’s issue would signify another milestone for Australian issuers on the European debt capital markets landscape. This follows a strong performance by domestic issuers during last years when Australian banks’ issuance of offshore debt reached record levels – surpassing pre-financial crisis records – despite the coronavirus pandemic.

Despite this positive backdrop, challenges remain ahead for Westpac’s euro-denominated bond sale, given current market uncertainty due to climbing coronavirus infection rates across Europe and heightened geopolitical tensions between China and Australia. Investors will carefully monitor these potential risks before deciding on participation in the deal.

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