News
The first Kangaroo transaction in almost two months priced in the week beginning October 17. Another Australian major bank returned to the domestic senior unsecured market and securitisation flow continued with a new transaction. In New Zealand, the third Kauri deal in three weeks was issued.
Moody's Investors Service (Moody's) placed its A2 rating on Bank of Queensland (BOQ) on review for downgrade on October 20, citing the bank's degree of reliance on wholesale funding – especially in short-term markets – as one of two key reasons for the review. BOQ is already rated BBB+ by both the other two main rating agencies.
The Australian Prudential Regulation Authority (APRA) sent a letter to all Australian authorised deposit-taking institutions (ADIs) on October 20, confirming the removal of the regulatory prohibition on their issuance of covered bonds. APRA expects to produce a new prudential standard for covered bonds, but confirms in its letter that issuance will be allowed in advance of that standard being finalised.
KfW Bankengruppe (KfW) (AAA/Aaa/AAA) launched and priced an increase to its May 2021 Kangaroo maturity on October 19. The A$250 million (A$257.6 million) tap adds to a line which was introduced in May this year and has been increased twice already, with the amount outstanding in the line after pricing on the increase being A$1.65 billion.
A prospectus for Woolworths' (A-/A3) offer of an indicative A$500 million (US$509 million) hybrid security was lodged with the Australian Securities Exchange on October 18. The transaction includes a specifically-targeted institutional offer, although fund managers contacted by KangaNews in advance of the official launch say they have yet to draw conclusions on their likely level of interest.
Asian Development Bank (ADB) (AAA/Aaa/AAA) priced a new NZ$150 million (US$118.8 million) five-year Kauri transaction on October 18. The new deal is ADB's second-ever Kauri transaction. It is the third Kauri issue within three weeks, with the most recent issue being the largest of the year: a NZ$350 million (US$281.1 million) tap from International Finance Corporation (AAA/Aaa).
The Australian Office of Financial Management (AOFM) released its 2010/11 annual report on October 14. The report suggests the overall market for Commonwealth government securities (CGS) issuance was positive over the year, highlighting a marginal reduction in effective yields for the financial year, increased secondary market turnover and increasingly-broad interest in Australian product from global investors.
The week ending October 14 saw the first Australian major bank transaction issued into the domestic market in more than two months. Elsewhere, sporadic securitisation flow continued with a new residential mortgage-backed securities issue.
Unexpectedly positive Australian employment numbers released on October 13 have caused some strategists to revise their expectations of an imminent Reserve Bank of Australia (RBA) rate cut, while more hawkish commentators say the jobs data supports their view. However, there are still economists who believe the employment figures should not be interpreted as an early sign of an upswing and still predict a November cut.