Trade Idea: Bank Issuance Following Earnings Season

Bank Issuance Following Earnings Season

Australian bank issuance has picked up following reporting season, with the major banks emerging from blackout periods and returning to the domestic bond market. Notable Tier 2 transactions have come from ANZ and Westpac, both accessing the AUD Tier 2 market and providing investors with opportunities to add high-quality bank credit at attractive yields.

ANZ – extending the Tier 2 curve

ANZ Banking Group returned to the AUD market following its 3Q26 trading update, issuing A$1.75 billion of Tier 2 capital across three tranches:

A$750m 15NC10 FRN: 3m BBSW +157bps

A$250m 15NC10 Fixed: 6.446%

A$750m 20-year Bullet Fixed: 6.749%

The transaction provided investors with a choice between floating-rate exposure, a long-dated callable fixed-rate structure and a 20-year bullet. ANZ reported 3Q26 cash profit of A$1.901 billion, up 1% on the 1H26 quarterly average. Net interest income increased 2%, group NIM improved to 1.54%, credit costs remained low at 3bps annualised and the CET1 ratio increased to 12.51%. ANZ’s credit metrics including credit costs, capital and liquidity are sound.

Westpac – attractive income from a shorter Tier 2 structure

Westpac also returned to the AUD market following its 3Q26 update with a new 10NC5 Tier 2 transaction, offering investors both fixed and floating-rate formats.

The transaction priced at:

Floating: 3m BBSW +127bps

Fixed: 5.901%

Expected redemption: 5 years

Final legal maturity: 10 years

Issue rating: A-/A3/A-

The shorter 10NC5 structure provides a different proposition to ANZ’s longer-dated issuance, particularly for investors seeking Tier 2 income without extending as far out along the curve. Westpac’s underlying credit position also remains robust. The bank reported A$1.8 billion of 3Q26 cash profit, up 2% compared with the 1H26 quarterly average. NIM remained stable at 1.89%, credit costs were 10bps and its CET1 ratio remained strong at 12.1%.

The opportunity for investors

The return of the major banks to issuance following earnings season is providing investors with fresh opportunities across the bank capital structure.

For investors seeking ~6% yields, Tier 2 continues to offer a meaningful yield premium to senior debt while retaining exposure to highly rated Australian banking groups with strong capital positions.

The latest ANZ and Westpac transactions also demonstrate the breadth of choice now available in the AUD market in maturity profiles – from five-year expected redemption through to 10yr and 20yr structures.

Fixed income continues to offer compelling real income, diversification and relative value, with new issuance providing access to quality credits across the investment-grade rating spectrum.

For more information on these securities or to discuss current opportunities in the Australian fixed income market, please contact the IAM Capital Markets team.