News

As the debut Australian sovereign or semi-government issuer of renminbi-denominated bonds, New South Wales Treasury Corporation (TCorp) says it is firmly committed to playing an instrumental role in the continued development of the renminbi market. Although the deal itself was small in the context of TCorp's funding requirement, the issuer says it expects the significance of the renminbi to grow in the coming years.

The repeal of the legislation that underpinned the official direction given to the Australian Office of Financial Management (AOFM) by government leaves it unable to conduct transactions in its residential mortgage-backed securities (RMBS) portfolio – despite apparent demand from third-party investors.

While Commonwealth Bank of Australia (CommBank) stayed at home to execute its debut tier-two transaction under the Basel III regime, a perceived acknowledgement that the Australian domestic market is unlikely to have the capacity to service the aggregate tier-two funding requirements of Australia's big-four banks drove National Australia Bank (NAB) to the more expensive euro market at almost the same time.

The Australian Prudential Regulation Authority (APRA) released the final version of its APS 210 rules on November 4. The new regime contains few changes from existing expectations, other than a second revision in just over two months of the liquid-asset rules which will be applied to foreign-bank branches operating in Australia.

Deal sources say domestic investors showed strong support for AGL Energy (AGL)'s inaugural senior-unsecured Australian dollar deal, allowing the borrower to price the largest-ever single-tranche triple-B corporate deal at tight pricing. Lead managers point to a revival of the market following a month of volatility and also flag a strong late-year pipeline for others to follow suit.

Following four consecutive rate hikes and then a hold decision at its September meeting, the Reserve Bank of New Zealand (RBNZ) left the official cash rate (OCR) on hold at 3.5 per cent when it met on October 30. The reference to further rate increases has been removed from the RBNZ's statement, and with only one meeting left before the end of the calendar year – on December 11 – many analysts now predict a stable OCR well into 2015.

Australia's first collective vehicle for funding local authorities is closing in on a market debut, with minimum volume of A$150 million (US$131.6 million) targeted. The Local Government Funding Vehicle (LGFV), which aims to provide lower-cost, capital-markets funding for councils in the state of Victoria, received a rating on October 9 having already roadshowed to institutional investors – and could launch a debut transaction in the near future.

Woolworths has completed a A$400 million (US$351.5 million) transaction in relation to its Work Cover contingent obligations, accessing the capital markets as its ultimate investor base. The transaction is believed to be the world's first syndicated bank-guarantee facility placed exclusively with global insurance companies, and deal sources say it highlights the potential for deals of this type to free up bank credit lines for corporate borrowers.

In the wake of its third euro transaction, Wesfarmers tells KangaNews that the decision to issue offshore was made on the basis of execution certainty despite a softer European backdrop. Even so, the borrower says the decision to issue euros was a close call over returning to the Australian dollar market.

A shift in long-held domestic investor attitudes towards securitisation product, at least partly owing to the growth of KiwiSaver, paved the way for New Zealand's first residential mortgage-backed securities (RMBS) issue in four years, the deal's issuer and lead manager say. This sea change is also aiding participation further down the capital structure than ever before.

The largest true-corporate bond issue in the Australian domestic market for nearly a year reinforces Australia's position in the funding toolkit for global credit issuers, lead managers say. This is also demonstrated by the fact that the average number of investors participating in these transactions is growing.

After four consecutive rate hikes the Reserve Bank of New Zealand (RBNZ) left the official cash rate (OCR) on hold at 3.5 per cent at its September meeting, which was held shortly in advance of New Zealand's general election. Analysts were universally expecting the pause and the consensus is now that will be on hold until at least March.