News

Standard & Poor's (S&P) and the Australian Securities Exchange (ASX) have launched a series of Australian bond indices, with the use of prices sourced from the multi-dealer platform, Yieldbroker, as a main selling point of the new product suite. S&P claims a wide range of market participants, including asset consultants, superannuation funds and funds managers, are supportive of the introduction.

ME Bank's second residential mortgage-backed securities (RMBS) issue of 2011 priced on October 12 at a size of A$665 million (US$661 million). The deal, SMHL Series Securitisation Fund 2011-2 (SMHL 2011-2) was upsized from a launch volume of A$500 million and adds to the A$1 billion ME Bank priced in another issue via its SMHL vehicle in March this year.

Lead managers on the most recent Kauri deal to come to market – International Finance Corporation (IFC)'s (AAA/Aaa) NZ$350 million (US$268.8 million) 2016 increase – continue to believe there are fundamental factors supporting further issuance. But they are also sanguine about the potential headwinds and say deal flow is likely to remain sporadic for the foreseeable future.

The Australian Office of Financial Management (AOFM) announced the culmination of its long-awaited bond curve extension on October 7, with pricing of the new A$3.25 billion (US$3.3 billion) April 2027 issue completed on October 20. The new line has a coupon of 4.75 per cent and priced in line with indicative levels at 23 basis points over the April 2023 Treasury bond spread.

The Australian market saw a concentration of activity in the securitisation market in the week ending October 7, with one transaction priced and another deal launched. The New Zealand market also saw the issuance of the largest Kauri transaction of the year.

Origin Energy (Origin) (BBB+/Baa1) issued its debut transaction in the US144A market on October 7, taking US$500 million in an October 2021 maturity with a 5.45 per cent coupon. The deal's margin, 350 basis points over US Treasuries, is described by one source familiar with the transaction as "within the range the borrower had targeted".

A new asset-backed securities (ABS) issue from Macquarie Leasing priced on October 7. The transaction was upsized to A$900 million (US$883.9 million) from an indicative A$350 million equivalent, with its largest tranche being partially denominated in sterling. It is the sixth Australian non-mortgage ABS deal to price this year, with the most recent transaction completed by CNH Capital on September 21.

International Finance Corporation (IFC) (AAA/Aaa) launched and priced a NZ$350 million (US$266.8 million) increase to its May 2016 Kauri line on October 5. The tap adds to a line which was introduced in May this year at a size of NZ$150 million and priced at 60.25 basis points over New Zealand government bonds.

Westpac Banking Corporation (Westpac) has priced its third residential mortgage-backed securities (RMBS) deal of the year, at a size of A$1.6 billion (US$1.5 billion). It is the sixth RMBS issued by an Australian major bank this year and the second within a month, following a recent A$1.5 billion equivalent issue from National Australia Bank.

The Reserve Bank of Australia (RBA)'s October 4 decision to leave cash rates unchanged at 4.75 per cent – for the 11th month in succession – did not come as a surprise to economists. The RBA noted the continued resilience of the Chinese economy in the face of successive waves of bad news from Europe and the US, although analysts have interpreted the reserve bank's overall tone as broadly dovish.

While no new public deals priced in the Australian markets in the week ending September 30, New Zealand saw a new Kauri and domestic bank issue as well as the launch of a new retail bond and just the third securitisation deal to emerge post-crisis.