News
Challenger closed the bookbuild on its capital notes offer on August 29, increasing the offer to A$340 million (US$317.9 million) from A$250 million. According to an Australian Securities Exchange statement the margin was set at 340 basis points over bank bill swap rate (BBSW), the tight end of a 340-360 basis points range.
Deal flow remined consistent during the week under review with 10 transactions in total. Scentre priced its debut Australian dollar deal soon after visiting the euro and sterling markets in July this year. Meanwhile Goldman Sachs's new seven-year deal is the longest tenor from an issuer in the FI sector since the financial crisis.
Goldman Sachs Group (Goldman Sachs) (A-/Baa1/A) priced a new seven-year Kangaroo benchmark deal on August 29. The transaction is the first senior-unsecured Kangaroo benchmark with such extended tenor from an issuer in the financial institution (FI) sector since before the financial crisis, according to KangaNews data.
Rentenbank (AAA/Aaa/AAA) launched and priced a tap of its March 2020 Kangaroo line on August 29. According to KangaNews data, the new transaction is the fifth tap to this line, which was originally launched in March 2012 and was most recently increased in November last year.
The first release of second-round submissions to Australia's financial system inquiry reveals limited enthusiasm from market participants around the inquiry's interim report policy options concerning corporate bonds. A number of new submissions argue that easier access to retail issuance will make little difference to Australian corporate bond supply, while others reject the idea of removing dividend imputation as a way of levelling the tax playing field between equity and other asset classes.
Commonwealth Bank of Australia (CommBank) priced its second prime residential mortgage-backed securities (RMBS) issue of 2014 on August 29. The transaction Medallion Trust Series 2014-2, was upsized from an indicative volume of A$1 billion (US$927.7 million) across three tranches.
Australia could be close to seeing its first wrapped transaction since the financial crisis. While the lone survivor in the Australian wrapper space – Assured Guaranty – claims the monoline wrap product can play a valuable role, domestic institutional investors say the rebirth will, at best, be gradual.
Scentre Group (Scentre) (A/A1) priced its debut September 2021 fixed-rate domestic deal on August 27.
Province of Québec (Québec) (A+/Aa2/AA-) launched and priced a new 10.5-year Kangaroo transaction on August 28. According to KangaNews data, the forthcoming transaction will be the borrower's first visit to the market since July 2011 when it priced a A$225 million (US$210.5 million) 10-year deal at 128 basis points over Australian government bond (ACGB).
AMP Capital says persistent low yields have not dampened the growing appetite of Australian retail investors for credit – as demonstrated by the fund manager's Corporate Bond Fund passing A$1 billion (US$935.8 million) in funds after management early in August, four years after being made available to retail investors. AMP Capital is also confident the domestic-focused fund will see more investment opportunities in the coming months.