Following a ratings review commenced in late February, Moody’s Investors Service (Moody’s) downgraded the state of Queensland and Queensland Treasury Corporation (QTC) from Aaa to Aa1 on May 21. Both state and treasury corporation were downgraded by Standard & Poor’s in February on the back of falling revenues.
On May 19 CFS Retail Property Trust (CFX) (A) priced a A$125 million (US$96.68 million) increase to its 5.75 per cent September 2012 bond at the expected level of 475 basis points over swap. Lead managers say the deal was more than twice oversubscribed and are confident it will pave the way for more wholesale corporate issuance in Australia.
In the wake of provision in the Australian federal budget for the resumption of index-linked commonwealth government security (CGS) issuance, the Australian Office of Financial Management (AOFM) announced on May 13 that it is set to commence a consultancy period to determine whether and how to revive the market.
The Australian federal budget, announced on May 12, has confirmed expectations of a borrowing requirement of A$60 billion (US$45.75 billion) for the 2009-10 financial year, some of which may be funded by renewed issuance of commonwealth inflation-linked bonds.
The residential, mortgage-backed security (RMBS) deal priced by Members Equity Bank on May 11 was upsized to A$714 million (US$548.57 million) – an increase of A$84 million from its April 30 launch volume – with cornerstone investor the Australian Office of Financial Management taking A$500 million of the paper.
Watercare Services will issue a total of NZ$200 million (US$118.74 million) of five- and seven-year maturity bonds in an institutional deal on May 15. The transaction is supported by a guarantee from Auckland City Council (AA) (Auckland City) and as a result has been given a double-A rating by Standard & Poor’s.
On May 7 Airservices Australia (AAA) (AsA) priced its five-year domestic bond offer, achieving its guidance pricing level and with it a margin significantly tighter than the most recent transaction from a top-rated Australian corporate – Australia Post’s March 25 five-year – at 100 basis points over swap compared to 130 over.
ANZ Banking Group (AA/Aa1) (ANZ) became the third of the big four Australian banks to price a billion dollar unguaranteed deal in 2009 on May 5 as it sold exactly A$1 billion (US$740.2 million) of three-year paper at 128 basis points over swap in a self-led transaction.
Speculation is growing that the forthcoming Australian federal budget will include a commitment to reigniting the market for inflation-linked commonwealth government securities (CGS), which was suspended in the 2003 budget when Australia concentrated its then-limited federal debt issuance in shorter-dated treasury bonds.
Tabcorp (BBB+) closed its five-year bond offer on April 30 having added A$84 million (US$60.86 million) to the initial A$200 million allocation to the institutional and brokerage sector. With around 90 per cent of the total paper being placed with retail investors, lead managers believe the transaction will spark further corporate issuance in the Australian retail market
On April 29 Rabobank Nederland (AAA/Aaa) (Rabobank) set the margin on its New Zealand market PIE (portfolio investment entity) Capital Securities transaction at 375 basis points over swap and announced it has upsized the transaction, to NZ$330 million (US$186.85 million) from the indicative level of NZ$200 million at launch.
The latest residential mortgage-backed security (RMBS) to be launched with backing from the Australian Office of Financial Management (AOFM) follows the pattern of recent asset-backed deals in Australia, splitting its senior tranches between a fast pay piece and a much larger one with a longer weighted average life (WAL).