September 14, 2017 / 12:19 AM / 10 months ago

Australia's CBA issues $3 billion in bonds, first since money-laundering scandal

SYDNEY (Reuters) - Commonwealth Bank of Australia (CBA.AX) successfully issued $3 billion in bonds in the United States, as investors looked past unprecedented money-laundering accusations leveled against Australia’s largest lender.

FILE PHOTO - A Commonwealth Bank of Australia logo adorns the wall of a branch in Sydney, Australia, May 8, 2017. REUTERS/David Gray/File Photo

The bank raised the funds through the three-part bond more cheaply than expected, after receiving orders of $5.9 billion, Thomson Reuters publication IFR Magazine reported on Thursday morning.

CBA had met investors last week to gauge support for the capital raising amid questions over whether the money-laundering scandal would impact its ability to raise debt.

“I think a lot of investors have been somewhat desensitized to announcements of banks being investigated by regulators,” said Nick Bishop, head of Australian Fixed Income at Aberdeen Standard Investments.

“There’s been an awful lot of examples of that and it has not meant a huge amount for the sector.”

CBA is being sued by Australia’s financial intelligence body, AUSTRAC, over alleged widespread breaches of anti-money and counter terrorism financing laws, and is also facing separate investigations by two regulatory bodies and a potential class action.

The strength of the U.S. bond market, which has seen $80 billion raised in the last fortnight alone, likely helped fuel demand, as borrowings from banks with such high credit standing are scarce and highly sought after, IFR reported.

“At the end of the day the Aussie banks still produce a lot of profits and it’s far from clear what might happen,” Bishop said, referring to the laundering charges.

CBA Group Treasurer Paolo Tonucci told Reuters on Wednesday that recent investor discussions had been “very constructive and the overall view of investors is that our credit quality remains high.”

The bond is divided into three parts, $700 million in bonds maturing in 10 years, $1.15 billion in five-year bonds, and $1.15 billion in three-year bonds, the IFR magazine reported.

The bank will pay only 97 basis points over U.S Treasuries for the 10-year fixed bonds, after it offered 112.5 basis points, while spreads for the three and five-year tranches were also reduced, IFR reported.

CBA’s shares have shed A$14.3 billion ($11.5 billion), or 9 percent, of their market value since the AUSTRAC case was lodged. It has blamed a coding error for most of the suspicious transactions and plans to defend itself in court.

Reporting by Paulina Duran in SYDNEY; Editing by Jane Wardell and Stephen Coates

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below