News

Triple-A Kangaroo issuance caught fire in the week to March 2 with deals from four supranational, sovereign and agency issuers adding up to the year's biggest Kangaroo week so far. There was also deal flow in the Australian domestic market, including another debut issue from an Asian bank's local branch, while in New Zealand the second Kauri transaction of the year came to market.

The most recent Australian corporate borrower to tap the Maple market, Transurban Finance (Transurban) (A-/Baa1/A-), says a Canadian dollar issue appealed more than other options it recently explored – including Australian dollar, euro and sterling issuance. Transurban placed C$250 million (US$252.9 million) in its seven-year Maple, which was also just the second Australian corporate Maple in recent years.

Asian Development Bank (ADB) (AAA/Aaa/AAA) priced its first Kangaroo deal of the year on March 1, with the issuer introducing a new March 2022 line. ADB visited the Australian market three times in 2011, pricing a total of A$2.35 billion (US$2.5 billion) between January and May.

A recent pickup in Kangaroo deal flow continued on March 2 as Rentenbank priced its Kangaroo debut for 2012. The German agency introduced a new March 2020 Australian dollar bond in its first issue into the domestic Australian dollar market since September last year.

March's first domestic corporate bond issue priced on the first day of the month as ETSA Utilities Finance (ETSA Utilities) (A-) upsized its new 5.5-year transaction, by A$50 million (US$53.8 million) to A$200 million. ETSA Utilities returned to the Australian market in March last year after an absence of over six years, pricing A$250 million in a transaction that also had 5.5-year tenor.

On March 1 Bank of China Sydney Branch (BoC Sydney) (A/A1/A) became the fifth Asian borrower to price an Australian dollar transaction in 2012 and the second Chinese bank to do so via a domestic branch. Oversea-Chinese Banking Corporation (AA-/Aa1/A+) priced its second-ever Australian dollar deal, a A$600 million (US$648.6 million) three-year floating rate note, on February 23.

Nordic Investment Bank (NIB) (AAA/Aaa) priced a new five-year Kauri deal on March 1 in a transaction that makes the supranational the second largest borrower in the Kauri market by issued volume. NIB has placed NZ$1.5 billion (US$1.3 billion) of Kauris following the new transaction's pricing,  NZ$100 million more than the third largest issuer in the market, International Finance Corporation.

KfW Bankengruppe (KfW) (AAA/Aaa/AAA) priced its fourth Kangaroo transaction of the year on February 29, increasing its March 2017 line by A$350 million (US$378.3 million) to A$2.4 billion. KfW had already placed A$1.15 billion of Kangaroos in three 2012 issues, matching the total number of deals placed by all other supranational, sovereign and agency (SSA) borrowers combined.

The reorganisation of Royal Bank of Scotland (RBS)'s fixed income, currencies and commodities (FICC) business that will see much of the bank's FICC trading operation in Sydney either closed or relocated will not affect the local origination and syndicate business, a bank source says. RBS Australia will continue to have a Sydney-based presence in debt capital markets and securitisation origination and is maintaining its local syndicate.

The completion of an exchange offer for subordinated debt issued by Royal Bank of Scotland (RBS) (A-/A3/A), but which the bank is prohibited from calling, has seen just under A$1.1 billion (US$1.2 billion) of domestic paper replaced with new RBS sub debt. The total outstanding in the four locally-issued tranches subject to the exchange offer in advance of its March 9 completion was A$1.9 billion.

AGL Energy (AGL) (BBB) set the margin on its retail hybrid offer on March 7, finalising offer volume at A$650 million (US$686.7 million) in a security with a seven-year term to redemption date. The issuer widened the offer margin from an indicative 340-360 basis points over bank bill swap rate (BBSW) to 380 basis points over BBSW.

Although the new benchmark A$1 billion (US$1.1 billion) deal priced on February 28 by New South Wales Treasury Corporation (TCorp) (AAA/Aaa) has a very close maturity date to an existing Commonwealth-guaranteed line issued by the state treasury corporation, TCorp says the new issue was not primarily aimed at reducing its outstanding Commonwealth-guaranteed volume.