Council of Europe Development Bank (CEB) (AAA/Aaa/AAA) priced A$250 million (US$253 million) in its first Kangaroo transaction of the year on February 2 following the announcement of the mandate for an increase to its December 2015 line a day earlier. The bond to be tapped is CEB's largest in the Australian market, with A$1.55 billion outstanding following the deal.
European Investment Bank (EIB) (AAA/Aaa/AAA) has increased its August 2020 Kangaroo line by A$400 million (US$399.9 billion) in what is its second tap of this bond in 2011. The line now has A$2.6 billion outstanding having been increased twice since its introduction in a A$1 billion transaction in July last year.
New South Wales Treasury Corporation (TCorp) (AAA/Aaa/AAA) closed its A$1.55 billion (US$1.55 billion) new February 2018 benchmark bond line on February 1. The transaction – which will be TCorp's first new issue following its mid-year funding programme update – was conducted via bookbuild and was significantly oversubscribed. It priced at 49 basis points over the January 2018 government bond.
With the Australia Day holiday halting the market mid-week, the only recent issuance activity in Australia was a Kangaroo launch by KfW Bankengruppe (AAA/Aaa/AAA). However, with the first domestic corporate bond of 2011 pricing unusually early in the year last week, many fund managers say they are waiting for the opportunity to snap up more paper from that sector.
On January 28, KfW Bankengruppe (KfW) (AAA/Aaa/AAA) priced its third Kangaroo transaction of the year – a A$300 million (US$296.7 million) tap to its March 2017 maturity. KfW has now issued A$1.6 billion of Kangaroos this year in the form of a new 2016 line inaugurated on January 12, and an increase to its 2020 maturity completed on January 20.
Investors in the US private placement (USPP) market continue actively to seek supply with most confident that last year's overall issuance volume – which reached close to US$50 billion – can be matched in 2011. With large portfolio managers reporting an almost even split between domestic and offshore allocations, there is also strong interest in further supply from the short list of preferred international jurisdictions – a list which includes Australia.
New South Wales Treasury Corporation (TCorp) (AAA/Aaa) has completed its half-yearly review of its 2010/11 budget, announcing that the semi-government's funding programme will remain unchanged from the target figure of A$10 billion (US$9.97 billion). The state funding agency tells KangaNews it is pleased with the increased number of offshore central banks participating in its deals, while it also hopes to increase its inflation-linked issuance.
On January 28, National Australia Bank (NAB) (AA/Aa1/AA) issued a new ¥56.3 billion (US$680.6 million) fixed and floating rate five-year Samurai bond, in the second Japanese transaction to come from a major Australian bank in 2011. The deal priced at the tight end of an original pricing guidance of 30-33 basis points over yen swap – with the issuer saying pricing is competitive to alternative markets – with both tranches achieving the same margins as ANZ's (AA/Aa1/AA-) January Samurai.
The Reserve Bank of New Zealand (RBNZ) announced the regulatory limit for covered bond issuance by local banks on January 21, with the cap – of 10 per cent of a bank's total assets – matching the hopes of domestic borrowers. The level is higher than the equivalent cap in other jurisdictions, and the limit – of 5 per cent – hinted at by the Australian federal treasurer, Wayne Swan, when he last year proposed the adoption of the asset class in Australia.
Recent predictions that Kangaroo deal flow in January would be down on the same month last year have been confounded, with the record for Kangaroo issuance in a single month being broken on January 20. The surprise factor appears to be consistently strong demand from the domestic investor base, with real money selectively joining a robust bank bid.
European Investment Bank (EIB) (AAA/Aaa/AAA) completed its second transaction of 2011 on January 21, in the form of a A$350 million (A$345.9 million) increase to its 2014 line. It also added a A$350 million floating rate note (FRN) tranche to the same maturity, following in the footsteps of Rentenbank - which issued a A$425 million FRN on January 19 - and Kommunalbanken Norway - which inaugurated a A$100 million FRN on January 18 before tapping it for the same amount two days later.
The Australian domestic corporate bond market has seen its first transaction in the month of January since 2003 with Volkswagen Financial Services Australia (VW) (A-/A3) pricing a new four-year bond on January 21. The deal achieved volume of A$150 million (US$147.7 million) including a A$50 million upsize from launch a day earlier.