SYDNEY, Feb 21 (Reuters) - Australia is expected to raise at least A$8 billion ($6.1 billion) in a new bond offer, two fund managers said, a month after the government sold a record A$9.3 billion issue.
The Australian Office of Financial Management (AOFM), the federal government’s funding agency, launched a 12-year issue on Tuesday with a margin of 13.5 basis points to 16.5 basis points over the implied yield of 10-year bond futures.
The AOFM did not give indications on the issue size, but investors looking at the issue said it was going to exceed A$8 billion.
The same fund managers said the margin was expected to be around 14 basis points, which is at the bottom end of price guidance. The investors asked not to be named because they are not allowed to speak to the press. The AOFM declined to comment.
Demand for the bonds did not seem to be affected by a potential ratings downgrade. Last year, S&P Global Ratings warned that Australia could lose its coveted triple-A credit rating if the government couldn’t put its fiscal house in order by May, when the annual budget is unveiled.
Pricing of the issue, jointly lead managed by ANZ Bank, Commonwealth Bank of Australia (CBA), Deutsche Bank and Westpac, is expected on Wednesday.
Separately, the state of Western Australia is seeking to raise debt maturing in three and five years, according to joint lead managers CBA and National Australia Bank.
Launch of the offer is expected later in the week. The joint leads did not disclose issue size or pricing indications.
Western Australian Treasury Corp (WATC) is the funding arm of the state government and the issuer of the bonds. It is rated Aa2 by Moody’s and AA plus by S&P. ($1 = 1.3043 Australian dollars) (Reporting by Cecile Lefort)