News
September began with consistent primary market activity in Australia, most consistently in the high-grade Kangaroo and securitisation markets. The largest single transaction of the week was a return to the residential mortgage-backed securities market by Macquarie Group. Meanwhile investors reported little upheaval in response to a ratings downgrade of Australian banks' old-style tier-two debt.
On September 6, Macquarie Bank priced its first Australian dollar residential mortgage-backed securities (RMBS) issue of 2013, which will also be the bank's first since it completed a new A$750 million (US$676.8 million) deal in April 2011. Macquarie Leasing has issued multiple non-mortgage asset-backed securities deals in recent years.
Westpac New Zealand (Westpac NZ) (AA-/Aa3/AA-) launched a new retail-format domestic transaction on September 6, announcing plans to place NZ$100-500 million (US$78.9-394.3 million) of five-year maturity, fixed rate notes. The self-led offer is being marketed at an indicative margin of 100-105 basis points over mid-swap.
Australian investors say the downgrade of old-style tier-two debt announced by Moody's Investors Service (Moody's) on September 5 does not reduce the value they see in the asset class. Fund managers continue to believe the pre-Basel III subordinated issuance of, in particular, domestic big four banks is a value hold. They do not anticipate any price action in the wake of the downgrade.
On September 5, the South Australian Government Financing Authority (SAFA) (AA/Aa1) priced a A$1 billion (US$917.5 million) floating rate notes (FRN) transaction.
AMP Bank priced its first residential mortgage-backed securities (RMBS) issue of 2013. The transaction, Progress 2013-1 Trust, was upsized to A$650 million (US$591.2 million) from its indicative volume of A$500 million (US$448.7 million) across four tranches.
The Reserve Bank of Australia (RBA)'s September 3 decision to leave cash rates unchanged at 2.5 per cent did not come as a surprise to economists. The accompanying statement was also unsurprising with most post-meeting discussion centring on the lack of explicit forward guidance. Some analysts say the RBA had little choice but to leave rates on hold, with global key event risk looming and a rate cut only last month.