News
The Australian market appears to be slowing entering the last month of the year, with steady deal flow but unspectacular volume characterising conditions. Of greater significance was the downgrade of Qantas Airways, to sub-investment grade status, by Standard & Poor's Ratings Services on December 6.
On December 5, Western Australian Treasury Corporation (WATC) (AA+/Aaa) priced a new four-year floating rate note (FRN) domestic transaction. According to KangaNews data, WATC priced its previous syndicated domestic deal on November 12, a six-year FRN issue with a volume of A$500 million (US$496.8 million) and pricing of 21 basis points over three-month bank bill swap rate.
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The "still uncomfortably high" level of the Australian dollar remains the key fixation of the Reserve Bank of Australia (RBA) in the eyes of analysts, with the reserve bank not changing its language on the exchange rate despite a drop to US$0.91 from US$0.95 in the month since its last cash rate decision. On December 3 the RBA left the Australian cash rate on hold, at 2.5 per cent, to the surprise of very few observers.
On December 3, Nordic Investment Bank (NIB) (AAA/Aaa) prcied a tap to its February 2024 Kangaroo issue. This is the second tap to the line which was launched at A$200 million (US$182.1 million) on August 23 at 82.25 basis points over the Australian government bond (ACGB) and increased by A$100 million on October 25 at 82.5 basis points over ACGB.
Austalian domestic deal activity slowed in the final week of November with just a handful of transactions pricing. Corporates were the most notably active as Eastern Distributor, via finance entity AMT Management, priced a debut seven-year deal and Aquasure also made its first-ever issue.
Resimac priced its new Australian dollar residential mortgage-backed securities (RMBS) issue on November 29. The transaction, Bastille Trust Series 2013-1NC, an indicative volume of A$350 million (US$317.9 million) across eight tranches.
Aquasure Finance (BBB+/A-) priced its debut seven-year deal in the domestic market on November 28. The deal follows a Fitch Ratings (Fitch) report published on November 13 which said ratings assigned to the issuer's A$3.75 billion senior-secured debt facility were dependent on a substantial portion of the loan being quickly termed out into the bond market. At the time the rating agency said Aquasure bond issues were at the planning stage.