News

Export-Import Bank of Korea (A/A2/A+) (Kexim) will be visiting Australian investors from June 7 to 10 on a non-deal roadshow via Deutsche Bank, RBS Group Australia and UBS Investment Bank. Kexim, which is owned by the government of Korea and provides export credit and guarantee programmes to Korean businesses, will be the second Korean financial institution to appear in the Australian market this year.

Suncorp Bank (A/A1/A+) upsized its APOLLO Series 2010-1 RMBS issue to A$1 billion from A$500 million on the back of strong demand from local investors.

In spite of some aggressive moves in the bills-Libor basis swap towards the end of last week and another quiet week in the vanilla primary market, developments so far this year in the euro-Aussie, AUD Uridashi and Kangaroo markets indicate that appetite for AUD-denominated product remains strong. Volume data reveals steady issuance volumes in the Uridashi market, but a strong performance from Kangaroos and euro-Aussies shows all-international issuance in Aussie dollars this year – totalling almost A$31.5 billion (US$26.3 billion) by May 27 – is on track to surpass the 2009 full-year volume of just over A$42 billion.

The first residential mortgage-backed securities (RMBS) trade in the New Zealand market since 2007 has been launched by NZF Group. The NZ$100 million (US$66.5 million) NZF Mortgages 2010-1 Trust - the first RMBS issue sponsored by NZF HomeLoans Limited – will be offered across three public tranches.

The Australian Office of Financial Management (AOFM) has been instrumental in driving another change in the residential mortgage-backed securities (RMBS) market which it hopes will bring about lower pricing in the primary RMBS market. The debt management agency hopes that this will in turn further support competition for residential mortgage lending and support lending to small business. The debt management agency has introduced this strategy via its participation in the upcoming A$500 million (US$407 million) RMBS deal launched by Suncorp Bank (Suncorp) (A/A1/A+) on May 25.

Western Australian Treasury Corporation (WATC) (AAA/Aaa) will raise total funds of A$8.9 billion (US$7.3 billion) in 2010/11. The funding agency for the state of Western Australia (WA) announced its new funding programme today, a day after the state's stronger-than-anticipated budget numbers were unveiled. On May 20 WA posted a surplus of A$286 million in 2010/11 and forecast the state economy to grow 3.75 per cent in 2009/10, with growth set to accelerate to 4.5 per cent in 2010-11 and 4.75 per cent in 2011/12.

With primary vanilla issuance at a virtual standstill for the third week in a row, intermediaries say secondary market activity has also slowed significantly with a lack of action on the buy and sell sides. However, confidence in Australian assets remains high with reports of offshore flows into local sovereign and semi-government paper even as the Australian dollar has experienced notable downward pressure. And market participants report continued demand for supranational, sovereign and agency (SSA) Kangaroos from Asian investors.

Following New Zealand's national budget on May 20 the New Zealand Debt Management Office (NZDMO) reiterated its interest in returning to the inflation market and its belief that demand for its linker product would be sufficient to make such a return. But it has yet to firmly commit to the market, saying only that it is "actively considering" issuing inflation product.