News

Another issuer returned to the Australian market for the first time since the crisis with GE Capital Australia (AA+/Aa2) pricing a new A$750 million (US$727.2 million) five-year transaction on October 1. The fixed rate line has a coupon of 7 per cent, and priced at a margin of 223.75 basis points over the April 2015 ACGB.

Council of Europe Development Bank (CEB) (AAA/Aaa/AAA) priced its fourth Kangaroo deal of the year on September 29 - a new A$300 million (US$290.4 million) 10-year line. The deal substantially extends CEB's Kangaroo curve from its previous end point of December 2015.

On September 27, Manukau City Council (Manukau) (NR) issued a NZ$350 million (US$259.6 million) September 2017 line, in what is one of the largest seven-year retail deals ever issued in the New Zealand market.

Issuers on- and offshore believe the Australian dollar market continues to develop as a consistent source of funds as issuance in both the Kangaroo and domestic arenas shows signs of added diversity. Recent weeks have seen new issuer sectors returning to the Kangaroo market – with covered bond borrowers also hovering – while the corporate pipeline in the domestic market is also starting to translate into deal flow.

The new April 2014 benchmark bond listed via tender by Western Australian Treasury Corporation (WATC) (AAA/Aaa) on September 23 came to market with a margin slightly tighter than that predicted by analysts. The agency placed a face value of A$500 million (US$478.4 million) of the 5.5 per cent coupon bond with by tender, attracting a cover ratio of 2.42, and a further A$616 million in a subsequent consolidation offer.

Speculation is mounting that the Kangaroo covered bond market could re-open as early as next week following a brace of roadshows from Canadian banks. However, at least one roadshow-arranging intermediary is playing down reports that a deal will inevitably take place, saying only that investor feedback is currently being assessed and a transaction will emerge if conditions are favourable.

The recent South Australian state budget has resulted in an increase to the South Australian Government Financing Authority (SAFA)'s (AAA/Aaa) indicative funding requirement for the 2010/11 financial year. The expected target figure is now A$5.6 billion (US$5.3 billion), up from A$5.1 billion before the budget on the back of an increased net debt requirement from the general government sector.

The Province of Ontario (Ontario) (AA-/Aa1) returned to the Kangaroo market with a new 10-year deal on September 22. The A$275 million (US$262.9 million) deal is the first transaction from a Canadian province in the Australian market since Ontario itself last placed a Kangaroo bond, in November 2006.

Following its recent update of fixed income investors in Australia and Asia, on September 22 Mirvac Group Finance (Mirvac) (BBB) priced a new six-year maturity domestic deal with an upsize to A$200 million (US$190.8 million) from launch volume of A$150 million (US$141.9 million). The transaction is Mirvac's second in the Australian market this year and achieved a similar margin to the issuer's March deal.

Fleet Partners priced its inaugural asset-backed securities (ABS) deal on September 21, taking A$178.8 million (US$168.6 million) across six tranches. The securitisation, FP Turbo Series 2010-1 Trust, is backed by motor vehicle leases with an average seasoning of 16 months.

The World Bank (AAA/Aaa/AAA) issued a new A$700 million 2020 maturity Kangaroo bond on September 21 in its third Australian market transaction of the year. This year was already a record for World Bank Kangaroo issuance, with the supranational having now priced A$3.6 billion (US$3.4 billion) in three transactions – easily surpassing its previous record of A$1.4 billion from 2009.