News

Local lead managers have designed a world-first three-tranche structure for the proposed debut social benefit bonds (SBB) in Australia, in what they say is an effort to accommodate institutional investor demand. The pilot notes will be the first SBB in Australia and the third in the world following launches in the UK and the US.

BHP Billiton Finance, a funding entity guaranteed by BHP Billiton, launched and priced the largest-ever non-credit wrapped corporate bond deal in the Australian market on October 9. The firm placed A$1 billion (US$1.02 billion) of new five-year notes in a deal market participants say was oversubscribed by nearly double.

The Australian Office of Financial Management (AOFM) priced a new benchmark 3.25 per cent Treasury bond line, maturing on April 21 2029, through syndication on October 10. The AOFM says the new line will not be tapped before February 2013.

BHP Billiton Finance (A+/A1) priced a new Australian dollar benchmark transaction on October 9, in what will be its first domestic deal in over a decade according to KangaNews data. The last time BHP Billiton issued domestic bonds – in November 2001 – it sold A$1 billion (US$1.02 billion) of three- and seven-year paper.

A quiet week in the markets followed the holiday in parts of Australia on October 1. Macquarie Leasing priced its fourth asset -backed securities (ABS) transaction in the US while the margin was set for Suncorp Bank's CPS2 hybrid transaction, though no new deals priced either side of the Tasman in domestic markets.

With the completion of its most recent transaction, in late September, Holcim Finance Australia became just the fifth non-financial corporate borrower to issue more than A$1 billion (US$1.02 billion) in the Australian domestic market since the financial crisis. The firm's parent says its expanded local operations will keep it a regular issuer, and it hopes to develop increased levels of local participation in its transactions.

Expected ratings have been assigned to a new auto-loan backed securities transaction from Macquarie Leasing. The deal, which has senior tranches totalling US$600 million supported by A$72 million (US$73.9 million) of subordinated notes, will be Macquarie Leasing's fourth asset-backed securities (ABS) issue of the year and the third time it has taken a transaction to the US dollar market.

The Reserve Bank of Australia (RBA) lowered the cash rate by 25 basis points, to 3.25 per cent, on October 2 on the back of weaker international growth outlook. The cut was broadly in line with market pricing but a little earlier than most local economists expected.

At the end of the third quarter of 2012, intermediary league tables for total public syndicated bond issuance in both Australia and New Zealand had ANZ in first position. The bank even manages to hold both top spots when self-led transactions are excluded from league table calculations, and it also narrowly pips National Australia Bank (NAB) to top the excluding self-led securitisation league table.

The growth of Australian dollar non-financial corporate bond issuance is one of the few notable highlights of a nine-month period in which Australian and New Zealand bond issuance consolidated rather than fully revived following a difficult second half of 2011. Both the Australian and New Zealand markets have had solid but unspectacular years in terms of bond issuance, while AUD securitisation continues to lag despite a positive third quarter.

Activity in the securitisation sector continued in the last week of September as three asset-backed deals priced, including ING DIRECT's first  residential mortgage-backed security issue to include a US dollar tranche. Australian markets remained open with three Kangaroo benchmarks and a new line via syndication for New South Wales Treasury Corporation.