Commonwealth Bank of Australia launched a consent solicitation yesterday (Tuesday) seeking bondholder approval to convert some seven issues across five currencies totalling A$9.3bn (Eu5.8bn) equivalent from hard to soft bullets, becoming the first Australian issuer to engage in such an exercise.

The issues are denominated in Australian dollars, euros, Norwegian kroner, sterling and Swiss francs. According to Florian Eichert, head of covered bond and SSA research at Crédit Agricole, the seven issues represent 39% of CBA’s outstanding covered bonds and 71% of the hard bullets that it has outstanding off its programme. He noted, as with other issuers including ING, US dollar bonds – in the shape of a US$2bn (A$2.82bn) benchmark – and some private placements are not part of the exercise.

Fitch highlighted last month that hard bullet issuance has fallen out of favour in Australian and New Zealand, with 100% of new benchmark issuance having been in soft bullet format since the second quarter of 2013.

“Hard bullet bonds were preferred by Australian and New Zealand issuers when the respective covered bond markets started, but this sentiment has switched – due mainly to the liquidity requirements that affect the cost-effectiveness of such bonds for the issuing banks,” said the rating agency, noting that of the four biggest issuers in each country only Bank of New Zealand is yet to issue a soft bullet.

The exercise follows similar lines to other recent consent solicitations, with a 5 cent early participation fee. The early instruction deadline is 18 September [corrected from 11] and meetings are scheduled for 24 September [corrected from 18], with the voting being on an issue by issue basis. The quorum level is two-thirds for the scheduled meeting and one-third for an adjourned meeting, with an approval rate of 75% necessary at either such meeting for the extraordinary resolutions to be passed.

The seven issues are, by ISIN: XS0729014281, XS0729014281, AU3FN0014866, CH0180071463, XS0775914277, XS0733058969 and XS0822509138.

CBA and Credit Suisse are solicitation agents.