Covered Bond Sales May Help Australia Banks Save 40%
This article is for subscribers only.
Australia’s four biggest banks may cut their borrowing costs by as much as 40 percent selling covered bonds after European lenders pushed sales of the asset-backed debt to a record.
Westpac Banking Corp., Commonwealth Bank of Australia, Australia & New Zealand Banking Group Ltd. and National Australia Bank Ltd. may be able to issue three-year covered bonds priced to yield about 50 basis points more than the bank bill swap rate, less than the 85 basis-point spread on senior debt, according to Royal Bank of Scotland Group Plc. Moody’s Investors Service estimates savings of 20 percent.