Term deposit savers offered new option from CBA

Term deposit savers will likely be attracted to a new investment option from the Commonwealth Bank (CBA), it has been suggested.

Brad Newcombe, director of fixed income research at broker FIIG Securities, commented that the launch of the CBA's five-year retail investment bond will probably gain much attention among savers and investors over the next month.

The five-year bond promises a floating rate return of the 90-day bank bill rate plus 1.05 per cent, which translates into an initial return of just over six per cent.

Speaking to the Sydney Morning Herald, Mr Newcombe argued that the bond will particularly appeal to investors who believe that interest rates still have further to rise above the current official cash rate of 4.75 per cent – a level set earlier this month which lifted the 90-day bank bill rate to just above five per cent.

In addition, it was suggested that the bond will attract investors who might normally look to compare term deposits when searching for long-term fixed returns.

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