News
National Australia Bank (NAB) (Aa2) has become the third Australian major bank to price its inaugural covered bond transaction, issuing NOK2 billion (US$339.1 million) as part of a private placement to a small group of Norwegian investors. The issuer reveals the 10-year fixed rate deal was completed in response to reverse enquiry.
The week beginning December 19 saw a slowdown in issuance in Australia and New Zealand as the holiday break approached. However, major banks in both markets - ASB Bank and National Australia Bank - made their debuts into the covered bond market via privately placed transactions.
Fitch Ratings and Moody's Investors Service assigned definitive triple-A ratings to ASB Bank's (Aa3/AA) inaugural NZ$300 million (US$227.6 million) covered bond transaction on December 19. All four major banks in New Zealand have now issued covered bonds, with the latest deal coming in the form of a private placement.
Commonwealth Bank of Australia (CommBank) (AA-/Aa2/AA) priced its second Samurai transaction of 2011 on December 16. The ¥50 billion (US$642 million) five-year deal has a coupon of 1.27 per cent and achieved a margin of 75 basis points over yen swap – which proved favourable for investors, according to the leads.
FirstMac completed a new residential mortgage-backed securities issue on December 20. The transaction achieved its launch volume of A$300 million (US$298.1 million) and is FirstMac's second RMBS of 2011. After a busy November – with four asset-backed deals pricing – the securitisation market has seen a slowdown in December, with just one other deal issued, on December 8 by Liberty Financial.
Mid-year budgetary reviews published by Australian states in December are having limited impact on projected funding requirements for state treasury corporations. The updates from the governments of South Australia and Victoria entail slightly increased borrowing targets for 2011/12, while New South Wales (NSW)'s update has not changed the state's programme for the current year.
The week beginning December 12 experienced an increased amount of public deal flow in both Australia and New Zealand. Most notably, the Australian major banks were active both domestically and in the Samurai market. The securitisation market also saw the launch of the second asset-backed deal of the month.
On December 13 the Australian government released a discussion paper outlining its latest proposed attempt to kick-start a domestic retail corporate bond market. The paper focuses solely on possible moves to simplify the corporate bond offering process, explicitly excluding discussion on other structural problems in the corporate bond market it identifies and making virtually no mention of asset allocation patterns.
The week beginning December 5 saw a modest amount of public issuance. One corporate deal and one securitisation transaction priced in Australia, while across the Tasman in New Zealand one small tap was completed.
Following its placement of several Eurozone sovereigns on to negative credit watch, Standard & Poor's has done the same with the triple-A ratings of 15 Kangaroo issuers – including the market's two largest borrowers, European Investment Bank and KfW Bankengruppe. However, intermediaries say they are confident that while downgrades might affect pricing they would not necessarily close the door to Kangaroo issuance.
Liberty Financial priced a new A$90 million (US$92.3 million) auto asset-backed securities deal on December 8. The transaction – which achieved its launch volume – is Liberty's third securitisation deal of 2011. It follows a A$250 million residential mortgage-backed securities transaction in April and a A$240 million commercial mortgage-backed transaction in July.
New Zealand's newest large-scale borrower, the Local Government Funding Agency (LGFA), was incorporated on December 7 after receiving its first confirmed ratings. The agency, which hopes to offer cost-effective debt funding to local councils across New Zealand, plans to commence bond issuance via a fortnightly tender process from February 2012.