Pricing of BBSY + 7% in the Australian market is indicative of...

Pricing of BBSY + 7% in the Australian market is indicative of debt which is considered as very high risk.

The term "Junk Bonds" refers to a bond which is rated below Investment Grade (these can also be referred to as high yield bonds). The cut off for IG is BBB-/Baa3. Australia doesn't really have a Junk Bond market, but there are many banks and non-bank lenders which provide loans which would typically be rated sub Investment Grade. The most developed sub IG market in Australia is the leveraged loan market (funding for the acquisition of companies by Private Equity funds). To characterize these loans as "Junk" is a little harsh (but technically correct) as often the borrowers are very good companies, but their leverage levels are quite high (hence the sub IG credit rating). Almost all leveraged loans are senior secured, so a "junk loan" is often also a "Senior Debt Facility". Most Junk Bonds (in a US context) are also senior debt obligations (as opposed to subordinated debt) and often carry first ranking security.

A typical leverage loan facility in Australia will be priced at BBSY + 4%-6% (depending on perceived risk - bb will be closer to 4%, and b more towards 6%). As such, the comments by @Jonnosmith and @grimloq that BBSY + 7% is a high interest rate are correct. This is not a comment on the merits of OBL as an investment or why management elected to put in place a debt facility carrying such a relatively high interest rate (clearly this is the rate they were required to accept if they wanted a 5 year $250m facility and they still believed that it will be accretive to overall shareholder value).