News

Kangaroo borrowers say demand driving bumper high-grade July deal flow continues to be concentrated in Asia, but Australian and European take up has been a growing feature of selected deals. As of the close on July 26, 13 Kangaroo transactions from 10 issuers have been completed in July for a total of A$3.35 billion (US$3.48 billion), with pricing on at least one more deal imminent.

General Property Trust Group (GPT) (A-/A3) has priced an increase to its 2019 domestic line priced in January 2012. The transaction adds A$100 million (US$103.4 million) to the A$150 million outstanding in the line and become GPT's second deal in 2012. Leads managers on the transaction are Commonwealth Bank Australia, National Bank Australia and UBS.

The Province of Manitoba (Manitoba) (AA/Aa1) has priced a new 10-year Kangaroo in its debut transaction in the market. In a 2008 roadshow, representatives from Manitoba indicated it had been studying the Kangaroo market for some time, and it saw a space for Australian investors to move out of pure triple-A into double-A credits. Lead managers on the deal are National Australia Bank and TD Securities.

In its first issue of 2012, Export Development Canada (EDC) (AAA/Aaa/AAA) has priced a new line of five-year notes to mature on August 8 2017. The deal's volume was finalised at A$750 million (US$780 million), and will add to two outstanding lines for a new total of A$2.25 billion. Commonwealth Bank of Australia, Citi and TD Securities are lead managers on the deal.

In what is its fifth trip to the Kangaroo market this year, Rentenbank (AAA, Aaa, AAA) priced a tap its 5.5 per cent 2020 line on July 20. The transaction adds A$100 million (US$154.6 million) to the German agency's A$9.4 billion of outstanding Kangaroo paper spread over nine lines, cementing its position as the third-largest Kangaroo borrower.

A survey of Australian self-managed superannuation fund (SMSF) investment patterns published by Multiport on July 19 indicates that while equity allocations have fallen in recent months the beneficiary asset class has been cash and short-term deposits rather than fixed interest. Overall, fixed interest represented just over 10 per cent of total SMSF holdings by June 30 2012 according to Multiport's data.

In the second week of July two semi-government borrowers came to the Australian market with large syndicated deals as a result of reverse enquiry, for a total of A$1.5 billion (US$1.6 billion). Unusually, both transactions were for shorter-dated maturities: New South Wales Treasury Corporation (TCorp) sold A$1 billion of July 2014 paper and South Australian Government Financing Authority A$500 million of December 2013 notes.

In its first domestic, non-asset backed deal since July 2011, AMP Bank (A/A2) priced a new transaction with a maturity date of July 27 2015. The three year deal had a final volume of A$100 million in a fixed rate tranche, and A$200 million of floating rate notes.

FMS Wertmanagement (AAA/Aaa/AAA) priced its second-ever Kangaroo transaction on July 19, following its debut in the market with a A$500 million (US$514.9 million) five-year issue in March this year. The transaction, which is being led by ANZ, Deutsche Bank and UBS Investment Bank, will add a three-year maturity to the issuer's nascent Kangaroo curve.

Korea Eximbank (Kexim) (A/A1/A+) priced its debut Kangaroo transaction on July 18, following a recent roadshow in Australia. The bank placed A$500 million (US$514.9 million) in a three-year line, making the transaction the largest-ever Kangaroo by a Korean issuer by A$150 million according to KangaNews data.

Continuing global market volatility is making it difficult to confidently predict the likely path of Australian dollar corporate issuance in the second half of the year, market participants say. While some continue to be optimistic that a solid first half can be at least repeated in the second, others point to divergent investor sentiment and a subdued supply pipeline as reasons to expect a patchy period of deal flow.

International Finance Corporation (IFC) (AAA/Aaa) priced its first new Kangaroo line of the year on July 17, following the July 16 announcement of a five-year mandate from the supranational. IFC has visited the Australian market on one previous occasion in 2012, adding A$300 million (US$306.8 million) to the 2020 bond it introduced two years previously.