News
The second Kangaroo transaction to be mandated in 2011 came on the same day as the first – January 10 – with Asian Development Bank (ADB) (AAA/Aaa/AAA) increasing its February 2016 line by A$1 billion (US$984.9 million) the following day. The deal is ADB's first in the Kangaroo market since April last year, and followed a 2020 increase from European Investment Bank (AAA/Aaa/AAA).
European Investment Bank (EIB) (AAA/Aaa/AAA) revealed the first Kangaroo deal mandate of 2011 on January 10, with the supranational increasing its August 2020 bond by A$600 million (US$590.7 million) one day later. The line was first introduced in a A$1 billion transaction in July last year before being increased on a single occasion, by A$600 million, at the start of September.
With the first full week of the new year a quiet one in the domestic market, the most notable activity over the holiday period from Australian borrowers came in the US, from two of Australia's big four banks. ANZ and Westpac Banking Corporation (Westpac) both announced buyback offers for US dollar, government-guaranteed benchmark bond lines with the former also pricing US$3 billion in a new standalone twin-maturity issue.
With deal flow for the year close to complete, and despite a relatively quiet final quarter, volume figures indicate that 2010 has been a record year for Australian credit issuance and for the Kangaroo market. There has also been increased year-on-year deal flow in the securitisation and corporate sectors, while domestic and Kauri issuance in New Zealand has eased without collapsing.
On December 17 the Australian Prudential Regulation Authority (APRA) released its approach to meeting the Basel Committee on Banking Supervision (Basel committee)'s bank liquid assets standards. Banks will be allowed to make up any shortfall in government-type debt with a committed secured liquidity facility containing as collateral any assets eligible for repo with the Reserve Bank of Australia (RBA).
Pepper Homeloans (Pepper) closed its A$260 million (US$257 million) residential mortgage-backed securities (RMBS) deal on December 20, in the first non-conforming RMBS to come to the Australian market since the financial crisis. While prime loans comprise 60 per cent of the pool, loans extended to borrowers with prior credit impairment make up 40 per cent and loans extended on a limited documentation basis represent 66.9 per cent of the pool.
International Finance Corporation (IFC) (AAA/Aaa) priced an increase to its March 2015 Kangaroo line on December 15, including in the deal its first-ever floating rate Kangaroo tranche. The deal comprises A$400 million (US$397.8 million) of fixed rate paper as a tap to the existing line alongside A$250 million of floating rate notes (FRNs) of the same maturity.
The New Zealand Debt Management Office (NZDMO) announced on December 14 that its government bond issuance programme for 2010/11 has been increased to NZ$13.5 billion (US$10.1 billion) from the previous target of NZ$12.5 billion. As the half-way point of the financial year approaches the NZDMO has completed NZ$7.8 billion of borrowing in 2010/11.
PSIS issued a NZ$100 million (US$74.7 million) residential mortgage-backed securities (RMBS) deal on December 13, in what is only the second New Zealand RMBS transaction since the financial crisis. According to the issuer it is also the first prime RMBS to be issued to third-party investors in New Zealand without lender's mortgage insurance.