Azernews.Az

By Bloomberg

Bayerische Motoren Werke AG has tapped into demand from investors in Australia for company credit, selling the first non-bank corporate bond in the nation in two months at a smaller yield premium than initially offered.

The German automaker’s Australian finance unit sold A$500 million ($388 million) of senior unsecured three-year notes at a spread over the swap rate of 65 basis points, having earlier marketed the deal at a gap of 70 basis points, according to an e-mailed statement from Westpac Banking Corp., which managed the offering alongside Australia & New Zealand Banking Group Ltd. It also bolstered the size of the transaction from A$300 million.

The offering follows a hiatus in non-bank corporate bond sales since before the Christmas holidays, with a A$275 million deal from John Deere Financial Ltd. on Dec. 11 the last non-bank offering to come to the Australian market, data compiled by Bloomberg show. Most local companies have been in blackout periods due to financial reporting requirements and the Australian market has been dominated this year by highly-rated sovereign-backed borrowers as well as foreign and domestic banks.

“There’s been a lack of issuance in the corporate space and that was certainly a factor in the types of bids BMW got and the size of the bid,” said Anthony Kirkham, who oversees about A$20 billion in fixed income as the Melbourne-based head of investments and Australian operations at Western Asset Management Co. “They brought the pricing in a little bit, but with the pent-up demand for corporate credit it seems that people were willing to accept that.”

The notes from BMW Australia Finance Ltd. are expected to be rated A+ by Standard & Poor’s, the fifth-highest score, and A2 at Moody’s Investors Service, the equivalent of one step lower.