News
Issuance data for the first half of 2014 paint an unspectacular picture of most Australasian markets so far this year. Volume in most sectors has been solid in comparison with the same point a year ago but, of the markets KangaNews tracks, only Kauri deal flow was on pace for an annual record by the end of June.
Despite significant demand for its latest syndicated deal, the New Zealand Debt Management Office (NZDMO) confirms it has no plans to update its tender schedule. The NZDMO priced the syndicated offer of a new 2027 maturity benchmark bond line on July 2, reaching its previously announced maximum volume of NZ$2 billion (US$1.8 billion).
Following yet another uneventful Reserve Bank of Australia (RBA) rates decision on July 2, analysts have been left searching for crumbs in a reserve bank statement which is universally interpreted as nearly identical in tone to its June equivalent. The strong Australian dollar features in many analysts' post-decision reports, but the consensus expectation is that the period of rates stability in Australia is likely to be protracted.
Port of Brisbane (BBB) set a new pricing benchmark for the Australian domestic market when it returned to issuance after a year's hiatus. The market's currently highly competitive pricing edge is noted by the borrower – which also flags its desire to return to domestic issuance in order to continue building out its curve.
University of Melbourne (AA+) became the second university to access the domestic corporate bond market in 2014, printing a debut A$250 million (US$234.1 million) seven-year issue on June 24. The solid fundamentals of higher-education issuers mean a continued wave of issuance from this sector is unlikely – but this enhances the appeal of these bonds, leads say.
The term-funding requirement in New South Wales Treasury Corporation (TCorp)'s FY 2014/15 borrowing programme, released on June 18 following the New South Wales (NSW) state budget, is A$2.5 billion (US$2.33 billion) lower than previous expectations. The progress of the state's asset-sale plan will further shape the future direction of state finances, including TCorp's funding strategy.
On June 12, the Reserve Bank of New Zealand (RBNZ) lifted the official cash rate (OCR) – to 3.25 per cent, its highest level since January 2009 – for the third consecutive monetary policy meeting. The reserve bank suggests downside data surprises are balanced out by those to the upside, leading some analysts to deviate only marginally, and others not at all, from their previous expectations of a continued tightening cycle.
Queensland Treasury Corporation (QTC)'s post-state budget funding update does not factor in the state government's plan to reduce debt by A$25 billion (US$23.2 billion) via a series of asset transactions. However, even before these transactions become a reality – which is conditional on the state government winning re-election in the next year – analysts note Queensland's improving fiscal path leading to an expected decline in debt levels from 2016-17.
New Zealand's Local Government Funding Agency (LGFA) appointed Mark Butcher as its new chief executive on June 3. Butcher, who is expected to begin his new role as chief executive of the LGFA in early-August this year, is currently treasurer at Auckland Council and has already served on both the establishment board and the board of directors of the LGFA.
The new treasurer of Western Australia (WA), Mike Nahan, says the state is well placed to manage the transition to the resources production phase despite what he sees as an ongoing reliance on mining royalties to supplement WA's small share of the national GST pot. Elsewhere, Western Australian Treasury Corporation (WATC) notes a reduced dependence on short-term markets in its post-budget borrowing forecast, even as growth in its funding programme peaks.
A group of four supranational, sovereign and agency (SSA) Kangaroo deals launched and priced in quick succession in the week of Australia's federal budget on May 13. Joint lead managers on the deals say high redemptions in May and June alongside improved global market sentiment were key drivers for the new transactions.
A May 15 New Zealand national budget which analysts describe as marginally less fiscally restrictive than that flagged at the last half-year update has fed through into a slightly increased funding task for the New Zealand Debt Management Office (NZDMO). New Zealand remains on track to return to surplus in the coming financial year, although the government has eased back on flight path for growth in surpluses.