As an ASX 200 big four bank share, Commonwealth Bank of Australia (ASX: CBA) is beloved by many an investor here on the ASX. The ASX bank shares are perhaps most famous for their large and fully franked dividend payments.

As such, they are a staple of income investors, pension funds and superannuation accounts all over the country.

And none more so than CBA. As ASX’s largest and best-performing bank (over the past ten years), CBA is one of the most popular investments out there.

So if you told an investor they could get a yield of 6.78% from CBA right now, they would probably hand over the cash without further questioning. But if that investor did start asking questions, they might realise that something is amiss.

Come 30 March later this month, CBA will have paid out two dividends over the past 12 months of $2.10 per share each. That will give the CBA share price a dividend yield of 4.26% based on the share price of $98.60 that the bank has closed at today.

4.26% is a long way from 6.78%. Even when grossed up with CBA’s full franking, that only comes out at a 6.09% yield. So what’s the deal here?

CBA issues high-yielding bonds

Well, this yield won’t be coming from CBA shares themselves. Rather, it will hail from the new round of fixed-interest investments, or bonds, CBA has reportedly issued.

According to a report in The Australian today, CBA has just wrapped up a subordinated and unsecured bond issue after raising $1.75 billion from the program and gaining $3.46 billion in demand. These bonds are fixed-rate, 15-year bonds with a non-call period of ten years. They will be offering a yield of 6.775% to investors.

It seems this is becoming a bit of a trend on the ASX. CBA’s fellow big four bank ANZ Group Holdings Ltd (ASX: ANZ) issued a similar batch of bonds just last month. Ditto with another blue chip ASX 200 share in Telstra Group Ltd (ASX: TLS).

CBA has yet to announce the eligibility criteria for these new bonds. But if the offer is similar to those of ANZ and Telstra, it’s likely that most ordinary retail investors won’t be able to participate.

So perhaps the majority of income investors out there might have to make do with CBA’s dividend yield of 4.26% for the time being.

The post Bond blitz: CBA offers 6.7% yield, but not on its shares appeared first on The Motley Fool Australia.

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More reading

• 6 ASX 200 directors buying up their companies’ shares this week
• Watch out CBA: This ASX 200 bank share is rapidly growing
• Down 8% in a month, is the CBA share price a buy right now?
• Forget term deposits and buy these ASX shares
• Why CBA, Coronado Global, Domino’s, and St Barbara shares are dropping today

Motley Fool contributor Sebastian Bowen has positions in Telstra Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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