News
While the latest Reserve Bank of Australia (RBA) cash-rate decision – a hold at 2 per cent announced on February 2 – surprised virtually no-one, analysts draw varying conclusions from the accompanying statement. The big disparity is whether the reserve bank sees growing reasons for a rate cut or whether it remains relatively comfortable with global and local growth.
The four Kauri transactions printed in the month so far match a record for January, and New Zealand intermediaries say solid on- and offshore demand continues to underpin high-grade Kauri deals. But they also have reasons to expect a moderate year for supranational, sovereign and agency (SSA) volume – and not just because of wider market turbulence.
ANZ and National Australia Bank (NAB) topped the tree in KangaNews's full-year intermediary league tables for Australian-market bond deals in 2015. ANZ comes out on top in the All-Australian Dollar Domestic League Table – including credit, syndicated government-sector and Kangaroo issuance but excluding self-led deals – while NAB scores in the pure domestic credit market.
Guy Debelle, Sydney-based assistant governor, financial markets at the Reserve Bank of Australia (RBA), used a December 16 speech to provide insights into how banks have adapted the asset and liability sides of their balance sheets to liquidity-coverage ratio (LCR) rules. He hinted at regulatory scrutiny of, in particular, the makeup of high-quality liquid-asset (HQLA) holdings and the use of self-securitisation.
Australia's mid-year economic and fiscal outlook (MYEFO) helped spur another substantial increase in the Australia Office of Financial Management (AOFM)'s funding plan, leading at least one analyst pondering the potential consequences of a sovereign downgrade.
A slower-than-expected improvement in New Zealand government finances revealed at the half-year fiscal and economic update (HYFEO) on December 15 leads the New Zealand Debt Management Office to forecast a somewhat larger funding task from next year. But analysts say the government's willingness to run larger deficits rather than seeking to cut spending is a sign of confidence rather than weakness.
Following the Reserve Bank of New Zealand (RBNZ)'s decision to lower the official cash rate (OCR) by 25 basis points on December 10, analysts believe the reserve bank does not intend to cut further unless its hand is forced. However, the consensus appears to be that a near-neutral stance from the RBNZ will not last long into 2016 and that further cuts remain likely.
Speaking at Australian Securitisation 2015 – the annual conference of the Australian Securitisation Forum (ASF) – market participants confirmed that the revised draft regulatory regime for the industry marks a significant step towards a larger market for Australian issuers. The latest iteration of APS 120 was released on November 26, and the Australian Prudential Regulation Authority (APRA)'s Sydney-based general manager, Patrick Brennan, addressed the conference on December 1.
The repurchase of A$526 million (US$379.8 million) of benchmark bonds by New South Wales Treasury Corporation (TCorp) on November 26-27 puts the issue of limited semi-government bond supply in the spotlight, say analysts and other market participants. TCorp completed the second of two buyback tenders on November 27, retiring A$300 million to add to the A$226 million taken out the preceding day.
The latest draft version of APS 120, the Australian Prudential Regulation Authority (APRA) rules governing securitisation, offers securitisers more user-friendly oversight than that set out in previous iterations of the standard. Significant moves include a potentially lighter-touch warehouse regime, the removal of a range of restrictions which many believed would block the development of master trusts in Australia, and the end of proposed 'skin in the game' requirements.
Intel Corporation (Intel) (A+/A1/A+) priced its debut Kangaroo deal late in the Australian day on November 24. The deal includes fixed-rate tranches of four- and seven-year maturity but did not print the four-year floating-rate notes which were sounded. It follows a series of calls with Australian investors which began on November 18.
Wayne Byres, chairman of the Australian Prudential Regulation Authority (APRA), used a November 5 speech to highlight the process of ensuring Australian banks are "unquestionably strong" as a key focus for 2016. However, Byres also gave a nod to recent capital-raising efforts when acknowledging local banks' solid starting place for next year's dialogue.