News
Analyst readings of an on-hold Reserve Bank of Australia (RBA) cash rate decision in February offer somewhat divergent conclusions, though the stable 3 per cent rate itself came as little surprise. While research notes published in the immediate wake of the February 4 decision interpret the RBA's tone as dovish, some economists appear to believe the latest decision heralds a somewhat reduced chance of imminent further easing.
World Bank priced the fifth Kauri transaction of 2013 on February 5, selling NZ$500 million (US$421.2 million) in the market's largest-ever single-tranche pricing event. The deal will added to the NZ$1.275 billion of Kauri bonds priced in the first few weeks of the new year, which is itself already a record for international borrower issuance into the New Zealand market by the first week of February.
A receptive market and helpful pricing economics helped the Kauri market break a clutch of records at the start of 2013, including the largest aggregate volume printed at the beginning of the new year and the largest-ever deal from a supranational, sovereign and agency (SSA) issuer.
The week of the Australia Day holiday saw the primary market in Australia slow to a virtual halt although National Australia Bank priced a large tap on February 1. Westpac Banking Corporation launched a new retail hybrid deal, while Suncorp Bank joined the trend for cleaning up domestic government-guaranteed debt with a buyback offer. Kauri issuance continued to be the only activity in the New Zealand market.
Export Development Canada (EDC) (AAA/Aaa) priced a new five-year Kauri transaction on February 1, in the market's third new deal of the year. The transaction adds to EDC's single outstanding Kauri line, a 2017 maturity which it issued in March last year and tapped once – in September – to total NZ$350 million (US$294.7 million).
Issuance from offshore borrowers continues to drive primary market activity on both sides of the Tasman Sea. Two more issuers made their new year Kangaroo debuts in the past week, while Nordic Investment Bank returned to the New Zealand market to complete the largest-ever high-grade Kauri transaction. In Australia's domestic market the most notable action was the completion of Commonwealth Bank of Australia's government-guaranteed buyback.
The first month of 2013 has now seen two US banks return to the Kangaroo market for the first time since the financial crisis, as Citigroup (Citi) (A-/Baa2/A) priced a new Australian dollar issue on January 24. On January 17, Wells Fargo returned to the Kangaroo market to price a combined A$900 million (US$947.3 million) in a fixed- and floating-rate five-year transaction.
African Development Bank (AfDB) (AAA/Aaa) became the latest issuer from the supranational, sovereign and agency (SSA) sector to price a Kangaroo transaction in 2013 on January 24, as it added a new five-year point to its Australian dollar curve. So far this year A$4.925 billion (US$5.18 billion) of Kangaroos has priced, A$4.025 billion of it from SSA names.
On January 22, GE Capital Australia Funding (GE Capital) (AA+/A1) priced a new domestic 2018 maturity bond issue totalling A$750 million (US$792.9 million). According to KangaNews data, GE Capital last issued Australian dollar bonds in November last year and its most recent previous five-year domestic issue came in August 2012.
On January 23 Commonwealth Bank of Australia (CommBank) became the last of the Australian big four banks to complete a substantial recent buyback of its domestic government-guaranteed bonds, as the bank announced its offer had closed with A$3.88 billion (US$4.1 billion) tendered. The offer was for up to A$5.26 billion of securities.