Feb. 17 (Bloomberg) -- Queensland, Australia’s biggest state borrower, and Victoria boosted debt sales this month as concerns eased that Europe’s crisis would spur global financial turmoil.
Queensland raised A$3.2 billion ($3.4 billion) since Jan. 31 and has now met 87 percent of its 2011-2012 financing program after borrowing A$16.7 billion since July 1, 2011, Queensland Treasury Corp. said yesterday in an e-mailed response to questions. Victoria had net debt issuance of A$1.1 billion in February, Treasury Corp. of Victoria said.
Australian states pulled back from bond markets in the final quarter of 2011 as concern Europe’s sovereign-debt crisis would slow global growth drove up the provinces’ borrowing costs relative to federal government debt. QTC’s February sales contributed to A$4.2 billion in term-debt issuance this year, after borrowings dropped by almost 75 percent to A$1.4 billion in the three months ended Dec. 31, from the previous quarter.
“A lot of people in the market have been sitting on cash and only buying government bonds, not bank or semi-government debt, and that builds up over a period of time,” Justin Lofting, general manager of treasury at TCV, said Feb. 15. “People looked at the market and said: ‘We haven’t bought these things for a while and spreads look wide historically.’ So the good demand has been there in the last few weeks for semi- government debt.”
Victoria issued net debt of A$3.9 billion since July 1, 2011, its funding arm said in a Feb. 14 e-mail. TCV has completed more than 70 percent of this financial year’s program, Lofting said.
The extra yield Queensland’s 6.25 percent note maturing in February 2020 offers over similar-maturity Australian government bonds narrowed to 122 basis points after touching 163 basis points on Feb. 1, the most since it was issued in February 2010, according to Bloomberg Bond Trader. The state has A$74 billion in outstanding debt, data compiled by Bloomberg show.
The spread for Victoria’s June 2020 bond declined to 84 basis points from as much as 106 basis points on Feb. 1, the most since it was sold in 2009. The state has A$28.7 billion in debt outstanding, Bloomberg data show.
--Editors: Garfield Reynolds, Benjamin Purvis
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