Citigroup Inc., reopened Australia’s dormant mortgage-backed bond market by offering investors a record high yield margin on A$500 million ($470 million) of securities, Bloomberg reports.
Citigroup priced the debt to yield 145 basis points more than the one-month bank bill swap rate, the company said today in an e-mailed statement. The bonds have the top AAA credit rating, which is supported by a Citigroup cash reserve of A$25 million, according to a Standard & Poor’s rating report.
The sale breaks a five-month drought in the Australian mortgage-bond market and shows record-high yields are enticing investors to return to debt markets, stalled by the collapse of the US housing market. The issue creates a pricing benchmark for future Australian bond sales and may lead to more deals.
The yield on Citigroup’s bonds is the highest since Bluestone Group Ltd. paid 108 basis points more than the swap rate on the last public sale of bonds in December, and is nine times the rate the New York-based firm paid on Australian mortgage-backed bonds 21 May last year.
The sale of the bonds, which have an average life of 2.94 years, was three times oversubscribed, according to the statement. Citigroup managed the sale with Macquarie Group Ltd.