All the attention in the debt capital market over the past week has been on Westpac's hybrid issue but the deal of the week was actually MyState Bank's modest tier two issue, which was priced at 500 basis points over bank bills.
?MyState Ltd is the product of a merger between MyState Financial and Tasmanian Perpetual Trustees in September 2009 and the subsequent acquisition of central Queensland based The Rock Building Society in December 2011. MyState Financial, an authorised deposit-taking institution, changed its name to MyState Bank last October.??
The possibility of a bond issue and, in particular, a Basel III compliant tier two subordinated bond issue, was flagged by Standard & Poor’s in a press release on Thursday. S&P announced that it had assigned a BBB rating to the bank's new A$2 billion debt issuance program, and that it had assigned a BB+ rating to a $20 million tier two subordinated debt issue.??
Later the same day, the bank priced a $25 million tier two subordinated debt issue with a ten-year non-call five maturity structure at 500 bps over bank bills.??
Whoever bought the notes has quite possibly got the deal of the decade.
??MyState is listed on the Australian Securities Exchange, so the notes will convert into ordinary equity should the bank ever be declared non-viable. The notes will not simply be written-off, as has been the case with a couple of recent tier two issues that have come to the market.
The closest comparable issue is ME's tier two notes issued in August last year. While these notes can be called one year earlier and the issue is rated one notch higher at BBB-, the notes are currently trading at around 270 bps over bank bills. The MyState tier two notes offer a 230 bps pick-up.??
Among other issues last week, Volkswagen Financial Services Australia (rated A) made its first issue for the year, selling $250 million of four-year bonds at a spread of 93 bps over the swap rate.
??L-Bank (Landeskreditbank Baden-Wuerttemberg Foerderbank, rated AAA) added $75 million to its August 2025 line, to take the total outstanding to $350 million. The tap was priced at 46 bps over swap and 71.75 bps over commonwealth government securities.??
Swedish Export Credit Corporation (rated AA+) added $50 million to its November 2024 line. The increase, priced at 72 bps over CGS, takes the size of the line to $225 million.??
In New Zealand, Kommunalbanken (rated AAA) opened a new August 2025 line at NZ$125 million. The bonds were priced at 111.4 bps over New Zealand Government bonds.
Resimac launched its second RMBS issue for the year and its first prime issue, via RESIMAC Premier Series 2015-1 Trust.