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Bond Market News

Aussie Banks’ Grandfathered Bonds Rally Towards Par

Grandfathered dollar bonds of Australian banks including CBA’s 5.438% Perp, ANZ’s 5.088% Perp and Westpac’s 5.36% Perp rallied by 7-14%. CBA announced that it will redeem its $125mn 5.438% (floating) Perp issued in 1986 at par plus accrued interest on its next call date of July 7. The note jumped from 85 cents on the dollar to currently trade at 99.7. While ANZ and Westpac have not made any announcement intending to redeem their bonds, it is likely that the rally in their Perps comes on expectations of the notes being called as well. ANZ’s $300mn 5.088% Perp is callable on October 30 with the bond rallying from 79 cents on the dollar to currently trade at 91. Westpac’s 5.36% Perp is callable on September 30 with the bond rallying from 78 cents on the dollar to currently trade at 87.

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