News
Domestic covered-bond issuance from Australia’s major banks has been scarce since 2012, with just one deal in each of the last three years. With global market conditions expected to be less benign in the immediate future, National Australia Bank (NAB) says its recent covered bond transaction was the right move.
The Australian responsible-investment market has taken another evolutionary step with the pricing of the inaugural Kangaroo social bond by International Finance Corporation (IFC). The issuer says the deal presented challenges, but IFC is confident the product will grow. Meanwhile, intermediaries say the transaction displays strong Australian investor appetite for the product.
Commonwealth Bank of Australia (CommBank) launched its first retail-targeted additional tier-one (AT1) transaction of 2018, PERLS X capital notes (PERLS X), on 7 March. CommBank says it is balancing price and volume aspirations carefully – and it is confident of a robust outcome. This is based on the level of genuine retail demand it is observing, coupled with some incremental institutional-investor support.
New Zealand domestic corporate deal flow is underway for 2018, with GMT Bond Issuer, the financing arm of Goodman Property trust (Goodman), and Transpower New Zealand (Transpower) pricing transactions that deal sources say demonstrate supportive demand dynamics. A notable feature of these transactions is crossover demand from retail and institutional investors.
Western Australian Treasury Corporation (WATC) says it is meeting client and investor demand, and fulfilling its financing promises by issuing a benchmark floating-rate note (FRN). Meanwhile, the issuer believes investors are beginning to respond to the green shoots evident in the Western Australian (WA) economy.
Bluestone Group (Bluestone) agreed acquisition terms with US private-investment firm Cerberus Capital (Cerberus) on 27 February, which sees the specialist lender’s Asia-Pacific business spun off as a separate entity. In the wake of the transaction, Campbell Smyth, Bluestone’s Sydney-based chief executive, discusses the impact of the deal.
Australia’s proximity to and ever-increasing ties with investors in Asia is spinning off plenty of impacts in the debt markets, one of which is heightened issuer engagement with the US dollar Reg S market. Reg S has the potential to become a true pan-Asian benchmark funding option, market users say.
A reduced aggregate funding target for calendar 2018 should change the issuance menu for Australia’s big-four banks, heads of funding tell KangaNews. Meanwhile, the majors say their funding tasks are well set despite the re-emergence of market volatility in February.
Westpac Banking Corporation (Westpac) opened a new route to sustainable funding when it printed a A$117.3 million (US$92 million) Uridashi deal earlier in February. The deal hints at growth in demand for sustainable and socially responsible products from Japanese retail investors and consequent opportunities for Australian issuers.
In the wake of the first nonbank securitisation deal of 2018, issued by Bluestone Group (Bluestone) on 20 February, issuer and lead managers insist investor appetite remain robust. They say that after a bumper year of issuance in 2017, the sector is primed to build on last year’s momentum.
The Kauri market is showing signs of building on the positive start achieved by supranational, sovereign and agency (SSA) issuers in 2018. Market sources also say a favourable move in the New Zealand dollar basis swap has improved Kauri economics for euro-denominated issuers such as KfW Bankengruppe (KfW).
The Australian Office of Financial Management (AOFM) completed its 11th and final residential mortgage-backed securities (RMBS) divestment auction on 22 February, with the securities sold representing the remainder of the portfolio. The total amortised face value sold was A$312.8 million (US$244 million) from five tranches originally issued by Bendigo and Adelaide Bank, ING and ME Bank.