News

The margin over government bonds paid by Treasury Corporation of Victoria (TCV) (AAA/Aaa) in the October 13 tender of its new December 2024 benchmark line was marginally wider than levels predicted by analysts in advance of the listing. TCV placed a total of A$755 million (US$743.7 million) of the new bond, A$512 million in an initial tender and a further A$243 million through a consolidation of outstanding lines dated beyond 2018.

On October 14, Société Générale (SocGen) (A+/Aa2/A+) priced its inaugural Kangaroo issue - a A$500 million (US$497.8 million) October 2014 line. SocGen is the second French financial institution to make its Kangaroo debut in a week.

Deals priced early in October have taken cumulative issuance in both the Australian domestic vanilla credit and Kangaroo markets to unprecedented levels. Excluding government guaranteed deal flow, both markets have now seen more volume priced than in any previous full calendar year while unwrapped corporate issuance also looks likely to hit record levels before the month is out.

In a quiet week for Australian issuance the revival of the Kangaroo covered bond market was the clear highlight. In the wake of the first such trade since 2007 – Canadian Imperial Bank of Commerce (CIBC)'s (A+/Aa2, with a covered bond rating of AAA/Aaa/AAA) A$750 million (US$737 million) three-year – investors and intermediaries say they expect the market to prosper on the back of expected sustained demand from, in particular, bank buyers.

Rentenbank (AAA/Aaa/AAA) issued a A$400 million (US$393.7 million) increase to its 6.5 per cent April 2017 Kangaroo bond on October 8, taking the total line size to A$900 million. The agency inaugurated the April 2017s in March this year with a A$250 million transaction and increased it by A$250 million on August 26.

ING Bank Australia (ING) launched its debut transaction in the Australian residential mortgage-backed securities (RMBS) market on October 7 as a A$500 million (US$487.5 million) transaction. The deal, IDOL Trust Series 2010-1, is based on a pool comprising only full-doc, fully mortgage insured loans and is expected to price on or before October 14.

Crédit Agricole (AA-/Aa1/AA-) priced its inaugural Kangaroo issue on October 8, selling a total of A$900 million (US$884.4 million) in the three-year deal. The transaction takes aggregate Kangaroo volume for 2010 to date to A$33.4 billion, surpassing the previous annual record of A$32.47 billion placed in full year 2006.

FleetPartners, which recently debuted as a securitiser with an auto loan-backed deal, issued the first auto operating lease transaction in Australia on October 5. The A$685.4 million (US$666.1 million) FP Turbo Trust 2007-1 (Australia) transaction hinged on the participation of a single third-party investor – Industry Funds Management (IFM) – in its lower-rated tranches, but the issuer is optimistic about the prospects of future such deals in the public arena.

By the end of the third quarter, combined Kangaroo and domestic credit bond issuance – excluding government-guaranteed securities – had already made 2010 a record-breaking year for the Australian bond market. At the end of September, a total of A$64.4 billion (US$ 62.2 billion) of primary market credit transactions had closed, surpassing the A$63.1 billion brought to market in full year 2006.

Canadian Imperial Bank of Commerce (CIBC) (A+/Aa2) priced A$750 million (US$737.8 million) in its debut, three-year transaction in the Kangaroo covered bond market on October 7. The deal was placed at a margin of 48 basis points over semi-quarterly swap – slightly tighter than the region of 50 basis points over swap expected at launch a day earlier.

Following a quiet week for deal activity across asset classes, market participants remain optimistic of forthcoming flow. In the asset-backed securities (ABS) market momentum appears to be continuing off the back of a brace of recent securitisations, with two issuers believed to be coming to market in the coming days and an expectation of deal flow in double figures for the rest of the year.

The New Zealand Debt Management Office (NZDMO) (AAA/Aaa/AAA) introduced a new 2019 nominal line on September 30, placing NZ$200 million (US$147.3 million) at a weighted average yield of 4.91 per cent having achieved a cover ratio of nearly five in the tender. Yield on the new line came in line with pre-tender predictions although the NZDMO appears to have paid only a tiny new issue premium.