News
On the same day as Liberty Financial (Liberty) priced Australia's second nonconforming residential mortgage-backed securities (RMBS) deal of 2013 – April 10 – preliminary ratings were assigned to another such issue. Liberty's transaction was based on a mixed pool of prime and nonconforming mortgages while the issue by Pepper Australia (Pepper), which priced on April 12, is fully nonconforming according to rating agency information.
Deal flow picked up in Australia and New Zealand although activity on both sides of the Tasman Sea remained focused on the high-grade space. Volume was underpinned by a large major bank benchmark in Australia, and by the first-ever nominal sovereign bond benchmark syndication in New Zealand.
KangaNews data show the first full quarter of 2013 producing differing issuance outcomes across sectors in Australia and New Zealand, as some hit record levels while others failed to match 2012 deal flow. In both markets, domestic bond issuance as a whole was down on the previous year's levels, with compensation coming in the form of Australia's relatively vibrant corporate and securitisation markets, and a Kauri renaissance in New Zealand.
Kommunalbanken Norway (KBN) (AAA/Aaa) priced a new 10-year Kangaroo on April 11, continuing a recent trend for Kangaroo issuance to be both long-dated and sourced from agency borrowers. Including the KBN issue, the last five Kangaroo deals – dating back to late March – have all been 2023 maturities from European agency names.
On April 10, ANZ Banking Group (ANZ) (AA-/Aa2) launched and priced a new self-led domestic deal totalling nearly A$2 billion (US$2.06 billion), the bank's first benchmark senior issue in the Australian dollar market since November 2012.
A new residential mortgage-backed securities (RMBS) transaction from Liberty Financial (Liberty), the second nonconforming RMBS in the Australian market this year, priced on April 10. Liberty also brought 2013's first nonconforming deal to market with the pricing of the A$200 million (US$210.9 million) Liberty Series 2013-1 Trust issue in mid-March.
The New Zealand Debt Management Office (NZDMO) cites market preference for immediate liquidity in a new benchmark line as the driver of its decision to use syndication for the listing of a new nominal benchmark line for the first time. The NZDMO placed NZ$2 billion (US$1.7 billion) in its new 2020 bond on April 10, and says it will consider further issuance of this type in future.
On April 10 ING Bank Australia (ING Bank) completed the buyback of its government-guaranteed bonds set for maturity in August this year. In total, the bank repurchased A$1.49 billion (US$1.57 billion) of the A$1.75 billion previously on issue in the fixed- and floating-rate lines at a repurchase price in line with other recent Australian government-guaranteed buybacks: 10 basis points below swap and bank bills.
In a further sign of the improvement in securitisation market conditions, the Australian Office of Financial Management (AOFM) announced on April 10 that it will not make any further investments in residential mortgage-backed securities (RMBS). The government debt agency invested A$15.5 billion (US$16.3 billion) of its A$20 billion RMBS mandate, although it has not been required to support a transaction since August 2012.