Two corporate transactions – a wholesale buyback and replacement offer from Adelaide Airport (BBB/Baa2) and a retailable deal from ALE Property Group (ALE) (NR) – priced at the turn of the month with margins on both suggesting a gradual firming of confidence in the Australian credit market by hitting slightly tighter levels than recent comparable trades.
The record for Kangaroo issuance in a single month has been broken with Rentenbank (AAA/Aaa/AAA) completing a A$250 million (US$228.5 million) new seven-year deal on the last day of March. Kangaroo issuance for the month is now at A$6.35 billion, marginally surpassing the all-time record of A$6.325 set in January this year.
The European Investment Bank (EIB) (AAA/Aaa/AAA) launched its second Kangaroo transaction in two weeks on March 31, announcing the forthcoming pricing of an increase to its August 2019 line. With its A$2.1 billion (US$1.9 billion) outstanding prior to the tap, EIB's 2019 Kangaroo is already one of the largest bonds in the market and a substantial increase could make it the second largest overall.
The Australian Office of Financial Management (AOFM) was one of nine investors in IMB's Illawarra Series Trust 2010-1 (Illawarra 2010-1) residential mortgage-backed securities (RMBS) transaction that priced on March 26. The Commonwealth government debt management agency took over half the deal's paper with an injection of A$157.5 million (US$143.3 million) out of the total A$300 million printed.
The buyback of existing December 2010 securities and replacement with a new, secured five-and-a-half year line by Adelaide Airport (BBB/Baa2) was confirmed in a March 26 deal launch. Adelaide Airport roadshowed the buyback and sale in mid-March with lead manager sources saying the period between roadshow and launch was spent gathering investor feedback and working on deal structure.
The first retail deal of 2010 opened on March 24 with ALE Property Group (ALE) (NR) offering to sell around A$100 million (US$90.8 million) of subordinated four-year notes with an indicative margin of 400-420 basis points over swap. The firm, which has only issued wholesale debt in commercial mortgage-backed securities (CMBS) format, says institutional demand for the new deal is substantial.
Nordic Investment Bank (NIB) (AAA/Aaa) priced its first Kangaroo of 2010 on March 25, selling A$600 million (US$546.8 million) in two tranches in its largest Australian market transaction. This deal follows hot on the heels of Asian Development Bank's (AAA/Aaa/AAA) $450 million tap priced a day earlier, although lead manager sources say the immediate Kangaroo pipeline may be set to ease.
National Australia Bank (NAB) (AA/Aa1/AA) says it has been sufficiently successful in its terming-out drive that it was happy to meet investor demand for a three-year deal in its March 25 domestic benchmark. NAB sold a total of A$1.5 billion (US$1.4 billion) of April 2013 fixed and floating rate paper in a self-led deal that priced at 77 basis points over semi-quarterly swap and bank bill swap rate.
On March 15 Telstra (A/A2/A) priced a benchmark €1 billion (US$1.4 billion) 10-year transaction. In November 2009 the firm soft-sounded a domestic 10-year deal, and in the wake of the issuer's latest euro issue there has been an erroneous perception in some quarters that the company had offered international investors better terms than were mooted locally.
On March 24 L-Bank (AA+/Aaa), the state development bank for Baden-Wuerttemberg, privately placed a A$75 million (US$68 million) two-year fixed rate euro-Aussie trade via Commonwealth Bank of Australia. The issuer says this is a positive sign for its prospects returning to the Kangaroo market after a three-year absence, as it proves there is definitely demand for the agency's paper in Aussie dollars.
Asian Development Bank (ADB) (AAA/Aaa/AAA) is on its way to doubling its record for Kangaroo issuance in a single year, adding A$450 million (US$412.9 million) to its February 2016 bond on March 24 to bring the total size of the line to A$850 million. On the same day, Nordic Investment Bank (NIB) (AAA/Aaa) announced the launch of its first Kangaroo of 2010 – a new five year line.
On March 24 National Australia Bank (NAB) (AA/Aa1/AA) became the third of Australia's big four banks to launch a domestic benchmark transaction in 2010, announcing that its new three-year issue will price within a day. The bank has not issued a domestic benchmark transaction since selling A$1.5 billion (US$1.4 billion) of five-year bonds in September last year.