The ratings review of Australia's big four banks initiated by Moody's Investors Service (Moody's) in February has concluded with the banks being downgraded to Aa2. The lowered rating had been widely expected by market participants as it largely brings the domestic majors into line with their levels assigned by the other mainstream agencies; Moody's has also now given the big four a stable ratings outlook.
On May 25 National Australia Bank (NAB) issued a new A$1 billion (US$1.1 billion) residential mortgage-backed securities (RMBS) deal, based on mortgages originated by the bank's Advantedge Financial Services (Advantedge) subsidiary. The deal was upsized from a launch volume of A$750 million.
International Finance Corporation (IFC) (AAA/Aaa) issued a new NZ$150 million (US$118.4 million) five-year Kauri line on May 19. The issue is just the second transaction to price in the Kauri market this year, and it takes IFC's outstanding Kauri paper to NZ$1.1 billion.
Sydney Airport Finance Company (Sydney Airport) (BBB/Baa2/BBB) announced its second domestic bond deal in a year on May 18, with the company pricing a new A$100 million (US$106.7 million) 2018 transaction two days later. The company completed its first domestic deal since 2006 – and its debut non-credit wrapped transaction – in June last year with the placement of a A$175 million 2015 line.
Telstra Corporation (Telstra) (A/A2) increased its domestic July 2020 bond line by A$150 million (US$160 million) on May 18. The tap was upsized from a launch volume of A$100 million and is the second time the line in question has been increased since it was inaugurated in a A$150 million transaction in June last year; it also had A$200 million added in November.
The latest Kangaroo deal to be issued by KfW Bankengruppe (KfW) (AAA/Aaa/AAA) has seen the German agency move within striking distance of European Investment Bank (EIB) (AAA/Aaa/AAA) as the largest Kangaroo borrower by both total issuance and outstanding volume. On May 19, KfW increase its January 2016 Kangaroo by A$500 million (US$533.4 million).
AMP Bank has completed a new A$940 million (US$996.8 million) residential mortgage-backed securities (RMBS) deal, which was upsized from a launch volume of A$500 million. The deal is the second RMBS of the month, following hot on the heels of a A$400 million issue from Resimac on May 13.
BNP Paribas Australia Branch (BNP Paribas Australia) (AA/Aa2/AA-) priced its second domestic deal of the year on May 16, issuing A$1 billion (US$1.06 billion) in a new May 2016 line. The issuer has been a consistent presence in the Australian market since its 2009 debut, placing A$1 billion that year followed by A$2.45 billion last year and A$800 million so far in 2011.
The second financial institution (FI) Kangaroo to launch in a week was announced on May 16, with Morgan Stanley (A/A2) placing a new A$500 million (US$530 million) four-year transaction one day later. The deal, which is Morgan Stanley's first Kangaroo since February 2007, follows the pricing of A$1.25 billion of November 2016 paper by Goldman Sachs on May 9.
With A$850 million (US$903.3 million) priced in three deals by May 11, the supranational, sovereign and agency (SSA) Kangaroo market in the current month is running well short of the record levels printed as recently as January this year. But issuers behind the recent deals say re-emerging demand – especially from offshore – and improving margins are making the Australian market more appealing once more.
The recommendations of the report on competition within the banking sector recently released by the Australian Senate's Economics Reference Committee have been broadly welcomed by the firms they are designed to assist – smaller and regional lending institutions. But while institutions believe the recommendations would improve the competitive environment through easier funding, they say they are waiting to see if the recommendations are adopted before acclaiming a successful outcome.
Lead managers on the NZ$100 million (US$79.4 million) new seven-year line issued by Rabobank Nederland New Zealand Branch (Rabobank New Zealand) (AAA/Aaa) say retail demand in the country is strong, with limited supply being the main factor holding back deal flow. The latest transaction follows a similar-maturity, institutional-led deal from the same issuer last month.