News
Signs of life appear to be emerging in the New Zealand securitisation arena, with one issuer recently having established a programme and at least one other understood to be sizing up a deal. But market participants are tempering expectations by stating that this year's deal flow is likely to be limited as investors continue to be wary of non-bank names, with more activity anticipated to come through in 2011.
Following a clutch of shorter-tenor transactions, KfW Bankengruppe (KfW) (AAA/Aaa/AAA) returned the focus of the Kangaroo market to the long end on August 11 with the pricing of a new 10-year line. The last four Kangaroo deals, stretching back to late July, have been of three- or five-year duration while the last longer-dated offering was European Investment Bank (EIB)'s (AAA/Aaa/AAA) A$1 billion (US$915.4 million) 10-year on July 22.
Barclays Bank Australia Branch (Barclays Australia) (AA-/Aa3) priced a new five-year benchmark-sized transaction on August 10 in its second ever public deal in the Australian market. The issue comprises A$1 billion (US$913.3 million) of floating-rate notes and a A$500 million fixed-rate tranche.
With European bank stress tests and a broadly well-received update from the Basel Committee on Banking Supervision in the rearview mirror, Australian and New Zealand issuers are finding a more receptive audience for their bonds. While deal flow is picking up gradually, a spate of roadshows and intermediary reports of plentiful mandates suggest deal flow is right back on the agenda.
Australian bank funders and liquidity managers describe the July 26 release from the Basel Committee on Banking Supervision as a significant breakthrough for the local banking sector, with an expectation that funding tasks will be eased and that liquid asset definitions may become less onerous. However, further clarity is likely to be required before liquidity managers significantly alter their ultra-conservative investment behaviour.
On August 4, Liberty Financial (Liberty) launched its second asset-backed securities (ABS) and first residential mortgage-backed securities (RMBS) transaction of 2010. The deal – Liberty Prime Series 2010-1 – has an indicative volume of A$200 million (US$182.3 million) across eight tranches according to the issuer, which has not disclosed when pricing is expected or what margins are being targeted.