News
A new residential mortgage-backed securities (RMBS) transaction from Resimac priced on June 1, with the structure of the deal including both US and Australian dollar tranches. Premier Series 2012-1 closed at its inital volume of A$243 million (US$235.5 million) – spread across four tranches – and US$250 million in a single tranche.
The addition of a 144A capability to Queensland Treasury Corporation (QTC)'s domestic bond programme demonstrates the increasing importance of accessing demand for bonds in the primary market, the treasury corporation says. And despite the intricacies of adding US market language to a domestic programme, QTC's arranger says more borrowers may choose to follow suit.
The issuer and leads of the most recent Kangaroo residential mortgage-backed securities transaction – just the second ever to come to market – say they hope the time taken to establish programmes and investor familiarity will be rewarded by future issuance opportunities. Both Kangaroos to date have been based on UK mortgages, and the UK continues to be seen as the most likely source of further deal flow.
The fourth week of May saw an uptick in asset-backed security launches, with one deal pricing this week. New Zealand kept busy with the announcement of the 2013 national budget while bond deal activity on both sides of the Tasman slowed.
The New Zealand Debt Management Office (NZDMO)'s borrowing programme for the next four financial years, published alongside the national budget on May 24, projects steadily falling issuance in the years to 2015/16. The issuance figure for the current financial year has been increased by NZ$1.5 billion (US$1.1 billion), to NZ$15 billion, as part of a plan to reduce Treasury bill outstandings by NZ$4 billion in 2012/13.
On May 23, Bank of Queensland (BOQ) returned to the non-mortgage asset-backed securities (ABS) market for the first time since 2008 with its A$700 million (US$683.8 million) Series 2012-1E Reds EHP Trust auto-loan backed transaction. The deal's largest tranche comprises notes denominated in both Australian dollars and sterling.
The first covered bond issue from an Australian bank outside the big four will, subject to market conditions, be a domestic transaction from Suncorp Metway (Suncorp). Having had provisional ratings attached to the deal on May 21, the bank mandated a lead manager group on May 29 and announced its plans to issue a four- or five-year deal with "a strong bias for a fixed tranche".
Sources familiar with Heritage Bank's senior retail notes offer say the transaction's bookbuild closed three days ahead of the scheduled May 24 date on the back of significant demand. The deal's final size is likely to be in the A$220-250 million (US$215.2-244.5 million) range – nearly double its launch volume – and one source tells KangaNews the offer attracted oversubscriptions of almost four times the original issue amount.
Renewed Eurozone volatility continues to keep a cap on Australian domestic investor participation in Kangaroo transactions, market participants say. But with a solid international bid enabling a steady flow of smaller deals from less-frequent Kangaroo borrowers, intermediaries believe the market remains functional with manageable pricing for some global borrowers.
Volatility in Europe did not halt Australian issuance as deal activity sparked to life this week. Three high-grade Kangaroos came to market along with a syndicated semi-government bond, two residential mortgage-backed securities and a New Zealand domestic transaction.
Heritage Bank (Heritage) has added to the healthy deal flow in Australia's retail fixed income market with the May 17 launch of the first senior retail transaction of the year. The bank is seeking A$125 million (US$124 million) in the five-year transaction, which is its second approach to the domestic retail market having issued A$50 million of subordinated notes in October 2009.
National Australia Bank (NAB) became the third of Australia's big four banks to price a retail hybrid or subordinated notes offer in 2012 on May 21, doubling the indicative volume of the deal to A$1 billion (US$1 billion) of tier two capital with a 10-year maturity and five-year call date. The deal priced at 275 basis points over bank bill swap rate (BBSW) or the tight end of its 10 basis point margin range.