News
The Reserve Bank of New Zealand (RBNZ) raised the official cash rate (OCR) – by 25 basis points, to 3.00 per cent – for the second time in two rates decisions on April 24. Analyst commentary following the decision focuses on the downside developments which have been added to RBNZ commentary, but the clear expectation remains that further hikes will follow including at the next rates decision in June.
Australian deal flow showed no sign of slowing on the lead up to the Easter long weekend. Securitisaion flow resumed with three new RMBS deals from Liberty Financial, AFG Securities and Pepper Australia. Meanwhile the World Bank priced the first-ever Kangaroo green bond, designed to fund projects targeted at climate change issues which directly affect developing countries.
Issuer, investor and intermediary participants in the Australian domestic market's first-ever green bond transaction say the product is not simply one for specialist socially responsible investment (SRI) portfolios. In fact, the growth of sustainability targets across the Australian investment landscape – especially in the industry superannuation funds sector – is driving widespread excitement about the prospects for the green-bond asset class.
Pepper Australia (Pepper) priced a US and Australian dollar issue on April 17. The deal was upsized to a final A$500 million (US$467.9 million) equivalent from a provisional total volume of A$402.5 million equivalent.
Commonwealth Bank of Australia (CommBank)'s first domestic senior-unsecured transaction of 2014 saw the bank price A$2 billion (US$1.87 billion) of five-year paper split between fixed- and floating-rate tranches. The domestic market was one of several options that were open to the issuer, CommBank says, with global spread compression continuing to provide considerable choice.
World Bank priced its first green bond issue in the Kangaroo market on April 15, pricing A$300 million (US$280.9 million) in a transaction which the issuer says was placed with 15 accounts including a range of major Australian institutional investors. World Bank green bonds are designed to fund projects targeted at climate change issues which directly affect developing countries, the issuer says.
South Australian Government Financing Authority (SAFA) (AA/Aa1) priced a A$450 million (US$423.1 million) in a new benchmark select line on April 15. SAFA had previously advised the market that it had no intention to issue term debt in April.
After closing the eighth unrated deal it has arranged in the Australian market – and the first from a Kangaroo borrower – FIIG Securities (FIIG) says the participation of a wider universe of investors and growing interest from a diverse range of Australian-origin and offshore mid-cap corporate issuers is helping issuance volumes and individual deal sizes to grow.
Suncorp Metway (A+/A1/A+) launched a new five-year senior unsecured Australian dollar transaction on April 14. According to KangaNews data, the borrower's most recent previous domestic senior unsecured deal priced on December 10 last year. That deal, which had a volume of A$200 million (US$188.1 million), had pricing of 45 basis points over bank bill swap.