News
Cost competitiveness led University of Sydney (Aa1) to favour the domestic market over offshore alternatives for its first-ever bond issue, the issuer says. It expects to also prioritise the Australian market for any future issuance needs.
Australian domestic residential mortgage-backed securities (RMBS) issuance is set to recommence after a month-long hiatus with preliminary ratings assigned to two new transactions on April 14. One of the new issues is based on a mixed conforming and nonconforming pool while the other is a fully prime portfolio.
The Australian market stole the limelight again in the second week of April. Export-Import Bank of Korea kicked off Korean-origin Kangaroo deal flow for the year while University of Sydney and BPCE each priced inaugural deals in the AUD market.
On April 11, BPCE (A/A2/A) priced a debut four-year Kangaroo deal. According to KangaNews data, the transaction is the first French-origin deal in the Australian dollar domestic market since Société Générale priced a A$400 million (US$376.5 million) tap to its October 2014 line in March 2011. That deal had pricing of 165 basis points over three-month bank bill swap rate.
A number of submissions to Australia's financial system inquiry (FSI) encourage the government to play a role in the further development of the country's structured-finance market, noting the important role of securitisation in particular as a supporter of competition in the financial sector. Master trusts, the covered-bond issuance cap, Australia's limited range of regulatory high-quality liquid assets (HQLAs) and capital relief for securitisation also feature.
Korean-origin deal flow has been slow off the mark in 2014 with Export-Import Bank of Korea (Kexim) pricing the first transaction of the year on April 9. But joint lead managers on the transaction believe appetite for Korean names will develop as investors become increasingly confident about the country's improving economy.
On April 10, the University of Sydney (Aa1) priced an inaugural fixed-rate issue in the domestic market.
ME Bank (BBB+/A3) priced a new four-year transaction in the domestic market on April 10. This is a timely return to senior issuance for the borrower which, prior to November last year, had not issued in this space – even with a credit wrap – since 2010.
Arguably the hottest debate in submissions to Australia's financial system inquiry (FSI) concerns competition in the banking sector. A raft of documentation provided by smaller banks and non-bank financial institutions (FIs) seeks to demonstrate to the inquiry that the Australian system provides unfair advantages to the big four. The major banks themselves, meanwhile, largely insist the system has no need for major change to promote competition.
Export-Import Bank of Korea (Kexim) (A+/Aa3/AA-) priced a new five-year Kangaroo transaction on April 9. The deal is the issuer's second Kangaroo bond after it priced a A$500 million (US$464 million) three-year debut at 190 basis points over mid-swap in July 2012.
On April 9, Metropolitan Life Global Funding I (MetLife) (AA-/Aa3/AA-) priced a new Australian dollar five-year benchmark issue. According to KangaNews data, the forthcoming deal will be the borrower's third-ever Kangaroo transaction. MetLife's most recent Kangaroo issue was a five-year A$375 million (US$348.1 million) deal which priced in October 2013 at 161.5 basis points over Australian government bond.