News
Bank deals in New Zealand's domestic market have seen a slow first quarter of the year but the recent start-up of activity has highlighted improved demand from retail investors for the coupon levels banks are willing to pay. According to the manager of the recent self-led deal from Bank of New Zealand (BNZ), the first bank deal to price in New Zealand this year, retail demand played a substantial role in the book.
Kiwibank issued its first-ever covered bond on March 25, selling CHF150 million (US$158.1 million) in a December 2020 maturity deal that is also the bank's first public, unguaranteed issue into a foreign currency market. The new deal was widely distributed to a wide range of investors, and Kiwibank says it hopes to return to the Swiss franc market periodically.
New South Wales Treasury Corporation (TCorp) (AAA/Aaa) priced A$2.5 billion (US$2.6 billion) in a new three-year maturity floating rate note (FRN) on March 26. The transaction is the second benchmark-sized FRN issue by an Australian semi-government this year following a A$2 billion placement by the South Australian Government Financing Authority (SAFA) in February.
A new residential mortgage-backed securities (RMBS) issue from ING Bank Australia (ING Bank), which priced on March 22, was doubled in size to A$1 billion (US$1.04 billion) from indicative volume. The deal increased the quantity of Australian dollar RMBS already priced in 2013 to nearly A$8 billion
Deal flow slowed significantly in the penultimate week of the first quarter, and the two Australian corporate deals that closed both came before the market turned its eyes to the emerging situation in Cyprus. Elsewhere Kiwibank took another step towards becoming New Zealand's first non-big four bank covered bond issuer.
Expected ratings have been assigned to a residential mortgage-backed securities (RMBS) issue by AFG Securities, a non-bank wholesale mortgage business owned by Australian Finance Group (AFG). The deal has indicative volume of A$275 million (US$285.2 million) across four tranches, and will become Australia's fourth non-bank RMBS issue of 2013.
On March 21, ANZ Wealth Australia (ANZ Wealth) (A+) launched and priced a new three-year deal in the Australian market, the issuer's first domestic transaction since June 2012. ANZ Wealth debuted in the market on June 14 2012 with a double-tranche issue of three-year fixed and floating rate notes that drew mainly domestic investors. Approximately 75 per cent of the deal was invested locally, with domestic asset managers as the biggest buyer.
On March 18, Goodman Australia Industrial Fund (GAIF) (BBB) launched and priced a new deal in the Australian market, the issuer's first public domestic transaction since May 2011. The five-year fixed rate deal was doubled in size to A$200 million (US$208 million).
Participants in the Australian residential mortgage-backed securities (RMBS) market say sentiment is at its strongest ebb for some years. Issuers and intermediaries highlight a number of supporting factors, including solid demand from international and real money investors, and a renaissance in the bid for mezzanine and subordinated tranches.