The Australian domestic bond market saw record issuance in the first quarter, with consistent volumes of more than A$5 billion (US$5.3 billion) pricing in each of the first three months of the year. By contrast, a sluggish March saw Kangaroo issuance fall away from the record volumes placed in January and February, while the New Zealand domestic market – although matching last year's deal flow – is also well short of its peak.
QIC Shopping Centre Fund (A-) launched and priced a new domestic issue on April 15, achieving a target volume of A$200 million (US$211.1 million) for the July 2014 maturity. The deal priced at 125 basis points - slightly tighter than the indicative level of 130 basis points over swap.
On April 13 Rabobank Nederland New Zealand Branch (AAA/Aaa) priced a new NZ$250 million (US$197.6 million) April 2018 floating rate note (FRN), at 145 basis points over three-month FRA. This follows the pricing of a A$600 million fixed rate April 2018 deal issued by Rabobank Nederland Australia Branch (AAA/Aaa) on the same day.
Intermediaries and investors alike agree that Westfield Retail Trust (WRT)'s (A+) inaugural transaction provides further positive impetus to the Australian corporate bond market, with continuing improvements in tenor, volume and pricing encouraging issuers to stick to their home market. Prospects for the corporate sector overall look promising, with this year's issuance volume already nipping at the heels of 2010's figure.
Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO) (AAA/Stable: S&P), and guaranteed by the Dutch government, has issued its inaugural Kangaroo issue. The new A$200 million (US$211 million) April 2014 floating rate note priced at 50 basis points over the bank bill swap rate.
The US dollar market has offered a fruitful source of debt funding for Australian corporates in recent weeks in both public and private format, with nearly US$4 billion pricing from five true corporate names since the end of March. Meanwhile, Australian banks have been active in the public euro market for the first time this year, with bank funding sources saying euro pricing has become more competitive with US levels.
Rabobank Nederland Australia Branch (Rabobank Australia) (AAA/Aaa) issued a new A$600 million (US$626.9 million) April 2018 domestic transaction on April 13 The fixed rate deal is the borrower's second issue of 2011, having reopened the domestic market for the year on January 12 with a dual-tranche A$900 million 2015 transaction.
The first Australian commercial mortgage-backed securities (CMBS) issue of the year has been completed, with the issue of a A$160 million (US$173.2 million) increase to a deal introduced by ALE Finance Company in May 2006. The new notes are subordinate to the existing A$130 million of the issuer's Series 1 CMBS paper.
Macquarie Securitisation completed a new A$750 million (US$789 million) residential mortgage-backed securities (RMBS) deal on April 15. The deal, which was upsized from a launch volume of A$500 million, is Macquarie Securitisation's second public RMBS transaction since the Macquarie Bank subsidiary recommenced mortgage origination in October 2009: it returned to the domestic market in September 2010 with a A$750 million issue.
On April 11, HSBC Bank Australia (HSBC Australia) (AA/Aa3) launched and priced a new three-year domestic deal with volume capped at its launch size of A$500 million (US$528.2 million). The floating rate notes transaction tightened its margin by a single basis point between launch and pricing, closing at 84 basis points over bank bill swap rate.
Westfield Retail Trust (WRT) (A+), the recently-founded entity which has taken ownership of the lion's share of Westfield Group (Westfield)'s Australasian assets, issued its debut bond transaction into the Australian market on April 12 one day after launch. The A$900 million (US$938 million) five-year deal was upsized from a launch volume of A$500 million and achieved indicative pricing of 120 basis points over swap.
Although the year started off with subdued activity in the Australian securitisation market – with just three asset-backed transactions being completed by the end of March – a number of residential mortgage-backed securities (RMBS) deals have been launched since the start of the second quarter. Intermediaries agree that demand from real money and balance sheets is abundant, but such appetite has remained unfulfilled as supply has been constrained.