News
Nearly five years after reaching their highest pre-financial crisis levels, Australian superannuation fund returns have recovered to their peak according to SuperRatings data. While improving equity markets have been the most notable driver of performance over the past 12 months, diversified fixed interest continues to be the best-returning of SuperRatings' sectoral indices over three-, five- and seven-year periods.
There was some deal activity this week both in Australia and New Zealand. The Kangaroo market saw three high-grade taps priced, all focusing on the long end. Westfield Retail Trust brought a small seven-year issue to the AUD market after over a year, priced in line with indicative level. The New Zealand market saw a five-year Kauri tap and a seven-year domestic issue.
Inter-American Development Bank (IADB) (AAA/Aaa/AAA) priced its second Kangaroo increase in October – and just the fourth Kangaroo transaction of the month from all borrowers – on October 19, adding A$175 million (US$181.4 million) to its 2022 line. IADB now has A$6 billion outstanding in seven Kangaroo lines.
Export Development Canada (EDC) (AAA/Aaa) priced a NZ$150 million tap to its 2017 Kauri bond on October 19, in what will be the issuer's second Kauri transaction of the year and the first from any borrower since August 21. The total outstanding in EDC's 2017 Kauri debuted line is now NZ$350 million. The issuer's other Kauri bonds have matured.
KfW Bankengruppe (KfW) (AAA/Aaa/AAA) added A$300 million February 2022 Kangaroo on October 18, which was the third long-dated Kangaroo transaction to price in just over a week. The Kangaroo market has been quiet so far in October, with all three transactions brought to market so far – the previous two came from Inter-American Development Bank and Nordic Investment Bank – having 2021 or 2022 maturities.
Nordic Investment Bank (NIB) (AAA/Aaa/AAA) priced its fourth Kangaroo transaction of the year on October 17: the supranational plans to increase its 2022 maturity from the A$500 million (US$515.7 million) currently on issue. Prior to pricing of the new deal NIB has issued A$950 million of Kangaroo paper in 2012 – including introducing the 2022 – having not placed a single transaction last year.
Westfield Retail Trust (WRT) (A+) launched and priced its first public deal in the Australian dollar market in over a year on October 16, upsizing an initial issue of A$100 million (US$102.5 million) new seven-year, fixed rate notes by A$50 million. The transaction matched its indicative pricing of around 190 basis points over swap.
The Australian markets saw A$4.4 billion (US$4.52 billion) in issuance this week in three deals, in large part due to an Australian Office of Financial Management syndicated issue of $3.25 billion. In additon, BHP Billiton returned with the largest non-credit wrapped corporate bond deal in the domestic market. Aside from one supranational Kangaroo tap, issuance was generally subdued across all markets otherwise.
Following its return to the Australian market with the country's largest-ever non-credit wrapped corporate bond deal, BHP Billiton says it expects to issue more AUD-denominated paper in future. The issuer also reveals that the size of its new deal – A$1 billion (US$1.03 billion) – significantly exceeded the volume threshold it targeted as a minimum for its return to the domestic market.
The extension by the Australian Office of Financial Management (AOFM) of the ACGB curve via the issuance of a benchmark 17-year line by syndication on October 10 drew strong investor demand, including an increase in offshore participation, according to issuer data. The A$3.25 billion (US$3.33 billion) deal attracted over A$3.93 billion in bids.