Kangaroo primary market volume reached A$1.75 billion (US$1.6 billion) in the nascent new year on January 8 as Rentenbank (AAA/Aaa/AAA) added A$200 million to its July 2014 line, bringing its total size to A$1.2 billion. The transaction is the fourth Kangaroo deal to price in just three days, with all the deals to date being increases to existing 2014 or 2019 lines.
European Investment Bank (EIB) (AAA/Aaa/AAA) priced a tap to its August 2019 Kangaroo line on January 8, selling A$450 million (US$412.43 million) of bonds at a tighter margin than the previous 2019 Kangaroo – KfW Bankengruppe (KfW)'s (AAA/Aaa/AAA) A$350 million trade from the previous day. The increased line is now EIB's third largest in the market, with A$2.1 billion outstanding.
Having already increased its Kangaroo market outstandings by A$2.625 billion (US$2.44 billion) in less than a year – in the process leaping from 13th largest Kangaroo borrower to fifth – Inter-American Development Bank (IADB (AAA/Aaa/AAA) believes it can develop its Australian presence still further. The supranational priced its first deal of 2010 on January 8, selling A$750 million in a tap to its May 2014 line.
The Kangaroo deal placed on January 6 by KfW Bankengruppe (KfW) (AAA/AAA/AAA) – the first of 2010 – attracted predominantly offshore demand, according to the issuer. However, with one third of the paper picked up by domestic buyers KfW is hopeful that 2010 will be another strong year overall for the supranational, sovereign and agency (SSA) Kangaroo market.
Sources in the bank funding and liquidity management sectors say the extension to the Australian Prudential Regulation Authority (APRA)'s process of revising its capital and liquidity requirements – which was revealed in a letter from the regulator to authorised deposit-taking institutions (ADIs) on December 18 – came as no surprise. And the response to the extension is generally positive, with most arguing it is worth taking the necessary time to produce the best possible outcome.
Westpac Banking Corporation (Westpac)'s (AA/Aa1/AA-) first residential mortgage-backed securities (RMBS) deal since May 2007 was upsized to A$2 billion (US$1.76 billion) for pricing on December 18. The Series 2009-1 WST Trust (WST 2009-1) was launched as an offering of a minimum of A$920 million in class A senior notes, with a further A$80 million divided between two subordinated tranches.
On December 15, Stockland Trust Management (Stockland) (A-) issued a A$300 million (US$272 million) fixed rate February 2015 bond after finalising the buyback of A$175 million of outstanding paper from its June 2011 line. It is understood that there was a narrow window of opportunity for the deal to be completed before the holiday slowdown, with deal sources confirming the buyback component of the transaction made it a likely candidate to be successful in this small timeframe.
The closing of an innovative philanthropic bond deal from the University of Canterbury (Canterbury Uni) (NR) headlined a busy New Zealand market last week, with the total volume of issuance reaching NZ$565 million (US$409 million). There are also hopes that Canterbury Uni's strategy can be replicated by other funders in the university space.
Following Royal Assent to the Tax Laws Amendment Act 2009 on December 4, all Commonwealth government securities (CGS) are now legally eligible for exemption from the non-resident interest withholding tax (IWT). Although intermediaries say there has not been an immediate impact in terms of buying activity from offshore, they remain hopeful that the removal will stimulate offshore demand for inflation-linked CGS product in particular.
Market users have offered a broadly positive response to a consultation paper from the Australian Securities and Investments Commission (ASIC) proposing a streamlined prospectus process for strong corporates who wish to issue retail bonds. And some believe the eventual result of the consultation could be a retail market offering Australian corporates a valid third option to wholesale and bank funding.
On December 10 Bank of Scotland Australia (BoS Australia) (A+/Aa3) priced an Australian government guaranteed March 2011 domestic bond with a total volume of A$1.4 billion (US$1.28 billion). The deal consists of two tranches: A$250 million of fixed rate notes pricing at 55 basis points over the June 2011 government bond and A$1.15 billion of floating rate paper which priced at 25 basis points over swap.
On December 8, the World Bank (AAA/Aaa/AAA) priced a NZ$125 million (US$89.25 million) increase to its December 2014 Kauri bond at 12 basis points over swap or 25 basis points over the April 2015 New Zealand government bond – the second increase to that particular line in less than a week with both issues coming to market at the same price.