News
Following the budget announcement of the state of Western Australia (WA) on August 8, Western Australian Treasury Corporation (WATC) released an indicative funding requirement for 2013/14 of A$16.9 billion (US$15.4 billion), with an expectation of a greater draw on floating-rate issuance. While ratings agencies saw little immediate change to the state's outlook following the budget, analysts say the WA's financial position makes further ratings deterioration more likely than a return to stable triple-A status in the foreseeable future.
The latest update from the Australian Prudential Regulation Authority (APRA) on its plans around liquid assets regulation has spurred divergent analyst views, although most do not expect the announcement to be a game changer in terms of spread performance for any asset class. APRA sent a letter outlining more detail on the forthcoming committed liquidity facility (CLF) to all authorised deposit-taking institutions (ADIs) on August 8.
Members Equity Bank (ME Bank) (BBB/A3) completed its buyback of government-guaranteed notes on August 6, retiring A$444.8 million (US$407.74 million) of its A$500 million February 2014 line.
On August 5, the Australian Office of Financial Management (AOFM) announced a further increase of expected net issuance, to approximately A$60 billion (US$53.3 billion) for 2013/14. The announcement follows a release of updated economic and budget figures by the Australian federal government, which disclosed further deterioration to the country's expected budget position.
Improved global tone saw four Kangaroo deals come to the Australian market in the past week, including Royal Bank of Canada's inaugural covered bond. The transaction was the first Australian dollar covered bond in 2013 and also the first Kangaroo covered bond executed by a Canadian bank under new Canadian government legislation implemented in late 2012.
Improved investor confidence and lower market volatility saw two new deals from financial institution (FI) Kangaroo borrowers – Royal Bank of Canada (RBC) and Goldman Sachs – come to the market on July 30. But, leads say, the reopening of the market is not likely to be followed by an immediate flurry of issuance.