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The recommendations of the report on competition within the banking sector recently released by the Australian Senate's Economics Reference Committee have been broadly welcomed by the firms they are designed to assist – smaller and regional lending institutions. But while institutions believe the recommendations would improve the competitive environment through easier funding, they say they are waiting to see if the recommendations are adopted before acclaiming a successful outcome.

Lead managers on the NZ$100 million (US$79.4 million) new seven-year line issued by Rabobank Nederland New Zealand Branch (Rabobank New Zealand) (AAA/Aaa) say retail demand in the country is strong, with limited supply being the main factor holding back deal flow. The latest transaction follows a similar-maturity, institutional-led deal from the same issuer last month.

Following Australia's federal budget, the Australian Office of Financial Management (AOFM) (AAA/Aaa/AAA) on May 11 announced a slightly reduced gross Treasury bond issuance programme for the 2011/12 financial year with new issuance in line with the current year's figure. The budget also contained a commitment to keeping a larger pool of government bonds outstanding even after Australia returns to surplus.

Goodman Australian Industrial Fund (GAIF) (BBB) priced its inaugural domestic transaction on May 12, having upsized the deal to A$175 million (US$185.8 million) from its target volume of A$150 million at launch a day earlier. The five-year deal met its indicative margin of 235 basis points over swap. The last domestic corporate deal came from Mirvac Group Finance (BBB) on April 17, when it completed a A$50 million tap to its March 2015 line at 205 basis points over swap.

Bank of New Zealand (BNZ) (AA/Aa2) is indicating its willingness to issue covered bonds in Australia via a non-deal investor roadshow in Melbourne, Sydney and Brisbane. The New Zealand subsidiary of National Australia Bank (NAB) (AA/Aa1/AA) believes a Kangaroo covered bond could assist with the development of the Australian market for the asset class and help its own funding diversity, without having a negative impact on future issuance prospects for the parent.

KfW Bankengruppe (KfW) (AAA/Aaa/AAA) priced a new May 2021 on May 11, taking its total volume in the market to A$17.4 billion (US$18.6 billion) and its number of lines to 12. The inauguration of the new bond, which becomes agency's longest-dated Australian dollar notes on issue, was mandated on May 11.

On May 9, Goldman Sachs Group (Goldman Sachs) (A/A1/A+) issued a new A$1.25 billion (US$1.3 billion) dual-tranche November 2016 Kangaroo, in what was the borrower's first Australian market transaction in more than five years. More Kangaroos from financial institutions (FIs) are expected to come as Australian pricing levels remain attractive on a global relative value basis, with investors who participated in the transaction pleased with what was considered a decent spread offering.

Resimac has issued the second non-bank residential mortgage-backed securities (RMBS) transaction in Australia this year, achieving its launch volume of A$400 million (US$422.9 million) on May 13. The deal, Resimac Premier Series 2011-1, is the issuer's first RMBS issue since November last year.

Kommunalbanken Norway (KBN) (AAA/Aaa/AAA) has its first Kangaroo bond of more than A$1 billion (US$1.1 billion) in outstanding volume, having increased its October 2014 line by A$200 million on May 10 to take its total on issue to A$1.075 billion. The line in question has grown from its initial volume of A$350 million at pricing in October 2009 through three subsequent taps.

On May 6, the Australian Senate's Economics Reference Committee released its final report on competition within the banking sector, with the report focusing on proposals designed to assist competition – including in the funding arena – rather than impose it. In a series of articles, KangaNews breaks down the committee's findings and recommendations as they may affect capital markets.

Securitisation is a major focus of the Australian Senate's Economics Reference Committee final report on competition within the banking sector, with seven of its 39 recommendations relating directly to the asset-backed market. Overall, the committee supports securitisation as a means to promoting competition in the banking sector, but it is cautious of suggesting government support continue indefinitely if the market model proves to be irreparably broken.

Australia's bank funding landscape could be altered in favour of the domestic subsidiaries of international banks if the recommendations of the Senate's Economics Reference Committee final report on competition within the banking sector are adopted. The committee suggests the already-proposed reduction in interest withholding tax (IWT) levied on borrowing from international parents by local operations be extended to abolish the tax as soon as is economically feasible.