News
In a repeat of its issuance strategy at the back end of 2009, on December 7 Stockland (A-) announced the completion of a new A$150 million (US$148.3 million) five-and-a-half year bond offer. The new line priced simultaneously with the buyback of A$149 million of the company's outstanding 2011 and 2013 bonds, the overwhelming majority of which fell in the shorter-tenor notes.
As a record issuance year draws to a close, high-grade Kangaroo borrowers remain confident that 2011 will also see substantial Australian market issuance. Even so, there are suggestions the torch may not burn as brightly next year as market participants wait for current volatility to play out and predict a narrower – but still favourable – basis swap range than had been expected 12 months ago.
Dexia is in the process of updating Australian investors during the borrower's first visit to Australia since 2005, with the firm saying it hopes to be able to transact in the market in 2011. Dexia has previously sold triple-A rated Kangaroo covered bonds via its Dexia Municipal Agency (Dexia MA) entity, with A$1.52 billion (US$1.47 billion) of that paper currently outstanding in five maturities.
New South Wales Treasury Corporation (TCorp) added Barclays Bank (Barclays) to its capital indexed bond dealer panel on December 2, with the bank becoming the third addition to a TCorp panel this year. However, Barclays is the first new member of the inflation-linked panel, with the other two new firms both joining TCorp's nominal global and domestic dealer groups.
On December 8, National Australia Bank (NAB) (AA/Aa1/AA) completed an offer to buy back its March 2012, government-guaranteed fixed and floating rate line, having successfully retired A$730 million (US$718 million) of paper. Investors were offered a buyback price of swap flat, compared to the margin of 60 basis points over swap and bank bill swap rate (BBSW) when the bonds were originally priced in March 2009.
Australian fund managers say they are relatively unconcerned about the credit quality of domestic securitised paper, but their views on pricing and liquidity are still some way from making them cost-efficient funders of wider competition in the mortgage market. And while there is some optimism about the progress the market has made in 2010 real money managers also admit there is a long way to go.
The Australian Prudential Regulation Authority (APRA) has revealed plans to introduce an eased capital treatment regime for residential mortgage-backed securities (RMBS), with the intention of allowing authorised deposit-taking institutions (ADIs) more access to capital relief while market conditions remain challenged. However, the regulator stresses the new treatment will be a transitional measure.
Australian residential mortgage-backed securities (RMBS) issuers are calling for further government support to aid the market's recovery, including an extension and broadening of the Australian Office of Financial Management (AOFM)'s investment mandate. But there is resistance to the idea of instituting any kind of permanent government involvement in the market, such as a Canadian-style mortgage agency.
In the wake of the November 23 placement of the A$400 million (US$386.8 million) inaugural Kangaroo bond from the International Finance Facility for Immunisation (IFFIm) (AAA/Aaa/AAA), the issuer's treasury manager, World Bank, has exclusively talked to KangaNews about why IFFIm is unique among supranationals and the factors underpinning its triple-A ratings.
Diversity in the senior unsecured bank sector received a welcomed boost this week as Suncorp Bank (Suncorp) (A+/A1/A1) issued the first benchmark non-government guaranteed deal from an Australian bank outside the big four since 2008. While the transaction priced competitively with what the issuer could have achieved in the securitisation space, there are doubts that the transaction will spark significant public senior unsecured deal flow from lower-rated and regional banks.
KfW Bankengruppe (KfW) (AAA/Aaa/AAA) has mandated TD Securities and Westpac Institutional Bank for an increase of its 6 per cent August 2020 Kangaroo bonds. The top-up will be priced in the near future, subject to market conditions. The 2020s are the longest-dated Kangaroo bonds KfW has on issue, with A$1 billion (US$98.6 million) outstanding.