News

After selling zero volume in its latest auction of residential mortgage-backed securities (RMBS), the Australian Office of Financial Management (AOFM) revealed on November 5 that the auctions scheduled for November and December 2015 would not proceed and that no auction will be held in January next year.

Westpac Banking Corporation (Westpac)'s annual results for the year ending September 30 2015, published on November 2, maintain the recent trend for Australian major banks' common-equity tier-one (CET1) capital ratios to fall into a very narrow band. Westpac reported CET1 of 9.5 per cent at the end of its financial year.

ANZ Banking Group (ANZ) published its results for the year ending September 30 2015 on October 29. The bank disclosed a common-equity tier-one (CET1) ratio of 9.6 per cent, and also highlighted its claim to have a stronger capital position than a range of global peer banks on a like-for-like basis.

Annual results released on October 28 by National Australia Bank (NAB) highlight the impact of the bank's A$5.5 billion (US$4.0 billion) equity raising in May. NAB also expects to add approximately 50 basis points more to a common-equity tier-one (CET1) ratio which had reached 10.2 per cent by the end of September this year, ahead of events which will reduce the position significantly.

The Australian government delivered its response to the financial-system inquiry (FSI) on October 20, accepting virtually all the inquiry's recommendations – including all those relevant to debt markets. The response offers a ringing endorsement of the Australian Prudential Regulation Authority (APRA)'s path on bank capital requirements and lays out an agenda for provision of retirement income within the superannuation system.

Local and offshore demand for Australian and New Zealand high-grade issuance has not been tempered by global volatility, according to the issuers of A$6.5 billion (US$4.7 billion) equivalent in a trio of deals. The local government and semi-government issuers say the transactions afforded up-to-date insights into investor views on Australia and its links to China.

Commonwealth Bank of Australia (CommBank) found an accommodative launch window for its first three-year domestic deal in three years against a backdrop of global volatility. Accessing the local market provided a pricing advantage, the issuer adds, thanks to a clear differential between local and offshore new-issue concessions.

Just two non-financial corporate transactions priced in the Australian market between Apple's jumbo Kangaroo deal on August 21 and the start of the second week of October – and KangaNews understands the pipeline to be thin. Nearly always bullish on issuance prospects, even intermediaries accept full-year volume is likely to fall short.

While the October rates decision from the Reserve Bank of Australia (RBA) – a hold, at 2.00 per cent – surprised few in the analyst community, some suggest the reserve bank's tone is notably less dovish than expected. The consensus is for a prolonged period of on-hold rates rather than further cuts in the near future.

With three-quarters of the year in the books, two banks in particular hold commanding positions at the top of KangaNews's intermediary league tables for domestic transactions across Australia and New Zealand. The Kauri market also has a clear leader, but the race to top the 2015 Kangaroo league table looks set to go down to the wire.

Analysts and markets appear to see a potential upside for the Australian economic outlook in the wake of the country's latest change in prime minister – but only a limited one. Indeed, any positive market response to the dramatic events of September 14 in Canberra was quickly overtaken by global economic realities.

Telstra Corporation (Telstra) (A/A2/A) rebuffed what appears to have been an appealing opportunity to issue globally in favour of returning to the domestic market, the issuer tells KangaNews in the wake of its first domestic deal since November 2013. Intraday execution did not negatively affect the outcome of the deal but was a necessary inclusion given the market backdrop, it adds.