Substantial pre-funding by New South Wales Treasury Corporation (TCorp) (AAA/Aaa) in the 2009/10 financial year – thanks to what the agency calls "a lower than forecast client net new funding requirement and favourable funding market opportunities" during the year – have helped keep its funding requirement for 2010/11 in line with that of 2009/10.
The Kiwis showed the Australian market how it's done this week, with the pricing of the first New Zealand bank covered bond prompting some bond-envy on the Australian side of the Tasman Sea. Meanwhile, KangaNews tracked a Korean agency looking to visit the Aussie market and talks with a brace of Nordic SSAs about how global investors are differentiating within their sector by strongly supporting their USD deals.
Moody's Investors Service and Fitch have assigned provisional long-term ratings of (P)Aaa/AAA to the mortgage covered bonds proposed to be issued by Bank of New Zealand (BNZ) under a NZ$3 billion covered bond programme. The cover pool will comprise NZ$521,777,333 of residential assets, with a weighted-average seasoning of 25 months and a remaining term of 275 months. The weighted-average loan to value ratio is 44.8 per cent.
Bank of New Zealand (AA/Aa2) (BNZ) has signed programme documentation for New Zealand's inaugural covered bond. Moody's Investors Service and Fitch will release their rating reports on the debut issue tomorrow. Transaction details are under wraps until then, but the bonds will be issued in structured format as the Reserve Bank of New Zealand (RBNZ) has yet to finalise legislation for the product.
Export-Import Bank of Korea (A/A2/A+) (Kexim) will be visiting Australian investors from June 7 to 10 on a non-deal roadshow via Deutsche Bank, RBS Group Australia and UBS Investment Bank. Kexim, which is owned by the government of Korea and provides export credit and guarantee programmes to Korean businesses, will be the second Korean financial institution to appear in the Australian market this year.
In spite of some aggressive moves in the bills-Libor basis swap towards the end of last week and another quiet week in the vanilla primary market, developments so far this year in the euro-Aussie, AUD Uridashi and Kangaroo markets indicate that appetite for AUD-denominated product remains strong. Volume data reveals steady issuance volumes in the Uridashi market, but a strong performance from Kangaroos and euro-Aussies shows all-international issuance in Aussie dollars this year – totalling almost A$31.5 billion (US$26.3 billion) by May 27 – is on track to surpass the 2009 full-year volume of just over A$42 billion.
The first residential mortgage-backed securities (RMBS) trade in the New Zealand market since 2007 has been launched by NZF Group. The NZ$100 million (US$66.5 million) NZF Mortgages 2010-1 Trust - the first RMBS issue sponsored by NZF HomeLoans Limited – will be offered across three public tranches.
The Australian Office of Financial Management (AOFM) has been instrumental in driving another change in the residential mortgage-backed securities (RMBS) market which it hopes will bring about lower pricing in the primary RMBS market. The debt management agency hopes that this will in turn further support competition for residential mortgage lending and support lending to small business. The debt management agency has introduced this strategy via its participation in the upcoming A$500 million (US$407 million) RMBS deal launched by Suncorp Bank (Suncorp) (A/A1/A+) on May 25.
Western Australian Treasury Corporation (WATC) (AAA/Aaa) will raise total funds of A$8.9 billion (US$7.3 billion) in 2010/11. The funding agency for the state of Western Australia (WA) announced its new funding programme today, a day after the state's stronger-than-anticipated budget numbers were unveiled. On May 20 WA posted a surplus of A$286 million in 2010/11 and forecast the state economy to grow 3.75 per cent in 2009/10, with growth set to accelerate to 4.5 per cent in 2010-11 and 4.75 per cent in 2011/12.
With primary vanilla issuance at a virtual standstill for the third week in a row, intermediaries say secondary market activity has also slowed significantly with a lack of action on the buy and sell sides. However, confidence in Australian assets remains high with reports of offshore flows into local sovereign and semi-government paper even as the Australian dollar has experienced notable downward pressure. And market participants report continued demand for supranational, sovereign and agency (SSA) Kangaroos from Asian investors.
Following New Zealand's national budget on May 20 the New Zealand Debt Management Office (NZDMO) reiterated its interest in returning to the inflation market and its belief that demand for its linker product would be sufficient to make such a return. But it has yet to firmly commit to the market, saying only that it is "actively considering" issuing inflation product.
Investec Bank (Australia) has launched its first Australian asset-backed securities (ABS) deal, at a size of A$240.7 million (US$211.1 million). The motor vehicle and equipment receivables transaction, Impala Trust Series 2010-1, will offer class A and class B notes to the market with the remaining four tranches of notes being held by the issuer.