News
Morgan Stanley (A-/A2/A) launched its second Australian dollar-denominated global bond transaction in just over a year on May 2, announcing plans to place a new five-year line. In February 2011 the bank placed A$850 million (US$879.6 million) in a 2016 maturity global deal, which it followed in May the same year with the pricing of a A$500 million, three-year Kangaroo.
At its half-year results presentation on May 2, ANZ Banking Group (ANZ) revealed that its reliance on offshore term funding has continued to fall although the growth of the domestic proportion of the bank's total term book was small in the first half of 2011/12. ANZ issued 44 per cent of its first half term debt in Australian and New Zealand dollars; 34 per cent of the bank's term debt outstanding was denominated in domestic currencies by March 31 2012.
The 50 basis point cash rate cut announced by the Reserve Bank of Australia (RBA) on May 1 largely took most local strategists by surprise and left expectations of the future direction of RBA decisions divergent. While some believe the cut signals a more dovish RBA tendency others believe the central bank may already have completed its likely downward path; still more say the future direction is now too difficult to call.
The stable funding note (SFN) priced by Rabobank Nederland Australia Branch (Rabobank Australia) (AA/Aaa/AA) on April 30 enabled the bank to capture demand from investors in shorter-tenor securities while still satisfying net stable funding ratio (NSFR) rules, issuer and lead say. The A$325 million (US$338.9 million) deal has a five-year maturity but also includes a put option allowing holders to cash out of their investment with 12 months' notice.
Although a May 1 cash rate cut by the Reserve Bank of Australia (RBA) is considered virtually inevitable by local economists, there is an expectation that international demand for AUD-denominated assets should prove resilient even to a more prolonged downward rates trend. Some economists also believe the extent of future rate cuts is being overstated by market pricing.
Deal flow took the week off as Anzac day fell mid-week and volatility continued in the market. There were no public syndicated transactions in either the Australian or New Zealand markets, from domestic or offshore borrowers.
While still relatively quiet in the third week of April, domestic issuance in Australia and New Zealand picked up after the Easter holiday. Three credit deals, including a corporate, priced in the Australian domestic market for a total of A$1.2 billion (US$1.24 billion) while New Zealand saw two transactions – a domestic and a Kauri – for a total of NZ$300 million (US$244 million).
A consultation document on Australia's implementation of its G20 OTC derivatives commitments published by the country's Treasury suggests an incentives-based drive towards central counterparty (CCP) clearing is preferred to a mandated approach. But the document also reiterates the Australian government's commitment that "all standardised OTC derivatives contracts" should be CCP cleared.
Powercor Australia (Powercor) (A-) priced its first Australian dollar transaction since August 2007 on April 19, announcing plans to place A$200 million (US$207.5 million) of new five-year bonds at an expected price of 170 basis points over swap.
Suncorp Metway (Suncorp) priced a new domestic three-year deal on April 18 in what will be the issuer's first domestic bond transaction since May 2011. Market sources had suggested during the first quarter of 2012 that Suncorp was close to placing a domestic covered bond transaction, but its first deal action of the year in fact marks a return to unsecured issuance.