News

The Australian residential mortgage-backed securities (RMBS) market continued its renaissance in the penultimate week of June with two new deals issuing. Auswide Bank printed ABA Trust 2017-1 for A$300 million (US$231.2 million) on 23 June, a day after Columbus Capital (Columbus) netted A$500 million from Triton 2017-1.

Brisbane Airport Corporation (Brisbane Airport) has made an emphatic return to the US private placement (USPP) market. The airport reached the financial close of its fifth USPP offering on 15 June having attracted a near eight-times oversubscription to a US$338 million equivalent transaction, at what it says was highly competitive pricing.

Wayne Byres, chairman of the Australian Prudential Regulation Authority (APRA), expressed in a 28 June speech his view that the final stages of Basel III planning and implementation “will largely mark the end of the cycle” for bank regulation. However, he also suggested that he does not want to see the regulatory work of the past decade unwound to serve any country’s domestic considerations.

The issuer and arranger of an innovative mezzanine warehouse-funding transaction say the deal demonstrates the burgeoning scale of demand for higher-yielding securitisation notes. The A$40 million (US$30.2 million), class B tranche of zipMoney’s first securitisation warehouse facility was placed with more than 400 accounts according to the transaction’s arranger, FIIG Securities (FIIG).

New South Wales Treasury Corporation (TCorp) joined its counterpart in Victoria in announcing a return to net new bond issuance for the coming year as the state exits its phase of asset transactions and consequent low or negative funding needs. On 21 June, TCorp disclosed an expected issuance task of A$6.4 billion (US$4.9 billion) for 2017/18 and further growth in the following years.

Moody’s Investors Service (Moody’s) lowered its macro profile for Australia on 19 June, a move that triggered a one-notch downgrade of 12 local banks including the four majors. The downgrade takes the Australian majors to Aa3 – a rating level equivalent to that afforded the big four by the other two largest rating agencies – and drops their New Zealand subsidiaries outside the double-A band, to A1.

The New Zealand Debt Management Office (NZDMO) says feedback from investors led it to initiate discussion within New Zealand government circles about committing to a minimum supply of sovereign debt on issue. New Zealand is approaching a forecast period of strong budget performance, and by maintaining bond supply the NZDMO hopes to support confidence in an actively traded market.

Aurizon Network (Aurizon)’s return to domestic issuance, nearly four years after its debut, is rated by buy- and sell-side deal sources as a relative-value success – allowing for a more than three-times oversubscription. The issuer says its confidence in the Australian dollar market was renewed by the pace of local deal flow during 2017.

While Australia’s corporate market appears to be more willing than ever to engage with longer-dated supply, a plurality of domestic fund managers say they expect to shorten portfolio duration. Investors tell KangaNews the portfolio impact of longer-dated corporate supply can be managed, however – allowing them to respond to issuers’ desire to add tenor to their debt profiles.

The annual post-budget funding update released by Queensland Treasury Corporation (QTC) on 14 June projects a lower issuance task for 2017/18 than previously anticipated, but a ramping up of issuance in the back part of the current decade.

In the wake of its first domestic deal in more than two years, Holcim Finance Australia (Holcim)’s lead managers attest to the strength of international and domestic demand for this issuer. They suggest momentum was helped by the limited volume of triple-B-band issuance during 2017 as well as the global name and positioning of Holcim’s parent and guarantor, LafargeHolcim.

Australia’s resurgent securitisation market received a further boost at the start of June as Commonwealth Bank of Australia (CommBank) became the first big-four bank of the year to price a residential mortgage-backed securities (RMBS) deal. Recent deals continue to demonstrate the evolution of demand for Australian securitisation across investor geography and credit level, issuers say.