News
Increased buy side demand for floating-rate product and shorter maturities convinced World Bank to simultaneously bring its debut benchmark floating-rate Kangaroo and tap its fixed-rate November 2016 notes. With interest in both formats driven by reverse enquiry, intermediaries say there may be similar issuance opportunities ahead.
Kangaroo market activity sat in the spotlight during the second week of September with four new deals and three line increases. Meanwhile on the other side of the Tasman Sea, Westpac New Zealand's new NZ$800 million (US$738.3 million) deal equals the record for single-tranche senior issuance in the New Zealand bond market.
World Bank (AAA/Aaa) has priced in the Kangaroo market for the second time in less than a month, following the September 12 mandate of a transaction comprising a new five-year floating-rate note (FRN) and an increase to the supranational's outstanding November 2016 fixed-rate Kangaroo. The FRN is be World Bank's first-ever such issue in the Australian domestic market.
Westpac New Zealand (Westpac NZ) (AA-/Aa3/AA-) priced its new five-year domestic deal on September having upsized the offer to NZ$800 million (NZ$650.6 million) from an indicative NZ$100-500 million. The issuer says conducive market conditions and the growth of the local institutional investor base helped drive record-equalling deal volume.
The Australian Securities Exchange (ASX)'s OTC derivatives clearing service saw its first interest rate swap activity on September 12, with the clearing of a transaction between Commonwealth Bank (CommBank) and Deutsche Bank. The exchange expects the introduction of dealer-to-dealer clearing – and its adoption this year by nine foundation customers – will be followed in Q2 2014 by the extension of OTC clearing services to end users.
Export Development Canada (EDC) (AAA/Aaa) has priced a tap to its May 2018 Kangaroo line. According to KangaNews data, the tap is the first increase of the line which was introduced on May 14 with a volume of A$400 million (US$369.1 million) and pricing of 59.75 basis points over Australian government bonds.
Market recovery and strong investor demand for securitisation issuance saw two new deals, from AMP Bank and Macquarie Group, price in the first week of September. Joint lead managers agree the pipeline for further issuance is strong, but acknowledge a shift in residential mortgage-backed securities (RMBS) distribution weighting towards bank balance sheet participation.