Australian banks gobble up record A$11b bond feast

Sydney

AUSTRALIA sold a record A$11 billion (S$12 billion) of debt this week thanks to insatiable demand from local banks, calming market worries about the impact that losing its coveted triple-A rating could have on Australia's debt.

The new November 2028 bond issue received a whopping A$21 billion in bids at the clearing margin of 14 basis points over 10-year bond futures.

That allowed the government to pay a spread at the lower end of the 13.5 basis points to 16.5 basis points marketing range.

"We thought of a standard A$5 billion to A$7 billion, maybe A$8 billion issue size," said Ian Clunies-Ross, head of investor relations at the Australian Office of Financial Management (AOFM), the government's funding agency. "So we were very pleasantly surprised with the level of demand…