News
Although the recent run of strong issuance from the bank sector continued in the past week, there are also signs of the domestic corporate market stirring with several corporates roadshowing and a number of deals in the pipeline. But while some corporates are gaining confidence in the market, others are still casting their net offshore for perceived security of pricing and volume.
ME Bank's third residential mortgage-backed securities (RMBS) transaction of the year priced on September 23, with the deal upsized to total volume of A$1 billion (US$955.3 million). The deal, SMHL Securitisation Fund 2010-3, had an initial volume of A$800 million at launch and is the first Australian RMBS transaction to price since FirstMac's A$416 million issue from September 6.
On September 16, the Royal Bank of Scotland Australia Branch (RBS Australia) (A+/Aa3/AA-) mandated a A$250 million (US$234.2 million) increase to its August 2013 line. The transaction is expected to launch and price today, and will add to a line that currently has A$1.5 billion outstanding across fixed and floating rate tranches of equal volumes.
Following its roadshow two weeks earlier, on September 22 DBNGP Finance (BBB-/Baa3) priced a A$550 million (US$525.6 million) five-year domestic transaction across a floating and fixed rate tranche. The deal is the first lower triple-B rated corporate transaction in Australia since the financial crisis.
Rabobank Nederland Australia Branch (Rabobank Australia) (AAA/Aaa) priced its first public domestic transaction since April on September 14, with a A$500 million (US$466.6 million) increase to its January 2013 line. The line now has a volume of A$350 million of fixed rate and A$1.2 billion of floating rate notes.
On September 16 the Australian Office of Financial Management (AOFM) priced its new 2030 inflation-linked bond, selling a total of A$1.25 billion (US$1.17 billion) at a real yield to maturity of 2.66 per cent. The transaction was launched a day earlier with a minimum size of A$1 billion and a volume cap of A$2 billion.
In a relatively quiet issuance week the focus in Australia shifted briefly from offshore issuers, with Commonwealth Bank of Australia (CommBank) (AA/Aa1/AA) pricing A$1.5 billion (US$1.4 billion) of three-year paper in the first domestic bank benchmark since mid-July. However, while the past few days have seen a lull in the offshore financial institution (FI) momentum witnessed in the past month more issuers are eyeing up the market with at least two having recently updated investors.
On September 8, KfW Bankengruppe (KfW) increased its March 2017 Kangaroo by A$300 million (US$273.3 million), in what was the issuer's 15th Australian market transaction of the year. The tap takes the line's outstanding volume to A$1.75 billion and KfW's annual total of A$6.05 billion issued in Kangaroo format.