Inter-American Development Bank (IADB) (AAA/Aaa/AAA) launched its third Kangaroo deal of the month on January 21, announcing that it will price a new May 2013 line in the near future. Having already issued A$900 million (US$819.9 million) in a brace of Kangaroo transactions this year – both of them increases to existing lines – IADB's new deal is likely to make it the biggest Kangaroo issuer of 2010.
Sources close to the firm say Bank of America Merrill Lynch (BoA)'s hire of 11 sales and trading staff from RBS Australia (RBS) marks a concerted push by the US bank to beef up its Australian fixed income, currency and commodities (FICC) operation. Although neither BoA nor RBS is commenting on the hires, sources close to both firms emphasise that the 11 did not, as reported elsewhere, make a up a team at RBS but instead filled various roles across its markets division.
The Australian domestic market reopened on January 20 with the pricing of a A$900 million (US$825.12 million) new January 2013 maturity for Rabobank Nederland Australia Branch (Rabobank) (AAA/Aaa). The transaction was subsequently upsized by a further A$150 million a day after initial pricing.
The debut Kauri deal from Asian Development Bank (ADB) (AAA/Aaa/AAA), which launched on January 20, is also the first Kauri transaction to launch in 2010. The issuer is bringing a new four-year deal in what will be the first New Zealand market trade from a supranational, sovereign and agency (SSA) issuer since World Bank (AAA/Aaa/AAA) priced a brace of taps in early December last year.
On January 20 Queensland Treasury Corporation (QTC) (AA+/Aa1) announced it will place a new November 2014 maturity bond line via syndication but without federal government guarantee. With QTC having applied for and received a guarantee on all its outstanding lines with maturities from 2011 to 2021, the new bond will be its only unguaranteed mid-curve price point.
With the January 19 pricing of a A$650 million (US$) to European Investment Bank (EIB)'s (AAA/Aaa/AAA) August 2013 Kangaroo aggregate issuance from supranational, sovereign and agency (SSA) borrowers in the Australian market passed its all-time monthly record. A total of A$4.675 billion of SSA Kangaroos has been sold in January 2010, beating the previous peak of A$4.33 billion from November last year.
The A$450 million (US$416.48 million) increase to KfW Bankengruppe (KfW)'s January 2012 Kangaroo bond that priced on January 19 brought the size of the line to A$2.1 billion, making it the issuer's first A$2 billion-plus line in the market and the joint third-largest Kangaroo outstanding. KfW is also just the second Kangaroo-issuing institution to have a bond of this size on issue.
The Australian government has welcomed a report by the forum it established to help secure Australia's future as a financial services centre, in which the development of the retail bond market is a key pillar. The report, published by Australian Financial Centre Forum (AFCF) on January 15, recommends a simplified retail issuance regime for local and international corporates, government institutions and supranationals.
In a relatively quiet week for offshore issuance from Australasian names the most apparent trend was the reopening of currency markets outside the US dollar, with transactions priced in Canadian dollars, Swiss francs and – with easily the most volume – yen. However, despite Westpac Banking Corporation (Westpac)'s (AA/Aa1/AA-) ¥111.3 billion (US$1.22 billion) Samurai deal there was, for once, more Kangaroo market activity than issuance going offshore.
Supranational, sovereign and agency (SSA) Kangaroo deal flow continued on January 14, with three more deals pricing for a total of A$700 million (US$650.65 million) and a fourth expected to complete a day later. Kangaroo volume for January has now reached A$3.75 billion across nine priced deals, with six issuers – all from the SSA sector – active to date.
Asian Development Bank (ADB) (AAA/Aaa) headlined another busy day in the Kangaroo market on January 12 with the inauguration of a A$1 billion (US$927 million) January 2015 bond. The market was also tapped by KfW Bankengruppe (KfW) (AAA/Aaa/AAA), which priced a A$300 million increase to its August 2013 maturity – the issuer's second transaction in less than a week.
In the absence of any domestic deal activity from local issuers, the first full week of 2010 has been dominated in the Australian market by the familiar sight of local banks' activity in the US market being only partly offset by Kangaroo flow. In total, three US deals from Australian banks netted US$5.75 billion while four Kangaroo transactions accounted for A$1.75 billion (US1.6 billion).