News
Deal flow remained slow in the first week after the Easter holiday, with a small volume of transactions pricing in Australia and just one in New Zealand. The most significant action of the week was likely the revision of equity credit hybrid methodology by Standard & Poor's, which had an immediate ratings impact on two borrowers and is likely to restrict future issuance of 100 per cent equity credit hybrids.
On April 5, Suncorp Metway (Suncorp) (A+/A1/A+) priced a new three-year issue in the domestic market. Suncorp priced its most recent previous issue on November 1 2012, selling a five-year fixed coupon covered bond transaction with volume of A$600 million (US$627.14 million) and pricing of 90 basis points over semi-quarterly coupon matched asset swap.
On April 4, Nederlandse Waterschapsbank (NWB) (AAA/Aaa) priced a new 10-year Kangaroo issue, the first in the market since March 20 when Bank Nederlandse Gemeenten (BNG) added A$75 million (US$78.61 million) to its 2023 Kangaroo line.
Intermediaries ascribe the relatively measured first quarter of the year for Australian corporates in offshore markets primarily to supply rather than demand factors. In fact, with two well-subscribed euro deals already in the books some bankers believe global credit markets are sufficiently robust that 2013 might see additional diversification outside US dollar issuance by Australian names.
On April 4, Australian Capital Territory (ACT) (AAA) priced a new nine-year 4.25 per cent coupon bond issue in the Australian market, in what will be the first syndcated issue by the territory this year.
The long-awaited revised Standard & Poor's (S&P) methodology on assigning equity credit to corporate hybrids, which was published on April 2, has sent a pair of Australian issuers into damage control mode. Both the immediately affected firms – Santos and Tabcorp Holdings (Tabcorp) – immediately responded to negative rating actions, though taking differing approaches.
The April 2 decision by the Reserve Bank of Australia (RBA) to leave the Australian cash rate unchanged, at 3 per cent, came as little surprise to local analysts. However, while post-decision commentary generally interprets the reserve bank's accompanying statement as little changed from the previous month, there is a gradually-growing suspicion that further rate cuts may now be less likely than had previously been expected.
The approaching Easter holiday weekend saw deal flow slow almost to a halt in Australia and New Zealand. Just a single public market issue priced in the week, although the deal in question – New South Wales Treasury Corporation's issue of A$2.5 billion (US$2.6 billion) of three-year floating rate notes – was both large and unusual in format.
The market for corporate issuance in the Australian domestic market was solid if unspectacular in the first quarter of 2013, although following three new deals from mid-March intermediaries are optimistic about a steady pickup in supply.
On March 27 the New Zealand Debt Management Office (NZDMO) announced the four banks it has appointed to lead its first-ever syndicated nominal bond issue. ANZ, BNZ, Deutsche Bank and Westpac Institutional Bank will take top-line position on the issue of a new 2020 bond, which the government debt agency expects to conduct in April.