News
ANZ and the New Zealand Exchange (NZX) hope the new Local Authority Bond (LAB) Index launched on April 29 will become a benchmark for fixed interest investments in the local authority debt market. While investors say the index could be a useful information tool, the current setup of the market – with deal sizes often too small for inclusion in the index – means its adoption is likely to be a work in progress.
A denuded issuance week to April 30 was marked more by what did not happen in the Australian market than what did. With minimal domestic deal flow – by April 30 the week looked set to become the slowest for issuance in Australia so far in 2010 – investor attention was focused on three local corporates closing in on offshore transactions.
Sydney Airport Corporation (Sydney Airport) (BBB/Baa2/BBB) has announced plans to explore the possibility of refinancing a pair of credit-wrapped domestic bonds maturing in November 2011 and December 2012 with new, unwrapped paper. The issuer plans to meet investors in Melbourne and Sydney on May 5 and 6 before committing to the replacement offer.
Telstra (A/A2/A) has announced it will present to investors on April 30 ahead of a potential Kauri bond issue. The presentation, which is being arranged by BNZ, Commomwealth Bank of Australia and Westpac NZ, will be made to both domestic and offshore investors. Telstra, which has NZ$255 million (US$183 million) outstanding in two Kauri maturities having last issued in 2008, will use the proceeds of any deal to pay down New Zealand dollar commercial paper.
Broad-based demand for high-grade product denominated in Australian dollars – from both local and international buyers – drove hefty issuance in the week to April 23. Appetite was also strongly focused on long-dated paper: two Kangaroo deals of nine-year or longer tenor priced and the week's sole corporate transaction was a five-year deal, with credit investors once again expressing their willingness to go longer.
Export Development Canada (EDC) (AAA/Aaa) is the second agency roadshowing in Australia this week with the intention of becoming a regular Kangaroo issuer. The non-deal roadshow began in Brisbane on April 19 before heading to Melbourne and Sydney, with the issuer saying the maturing Kangaroo market now offers more consistent borrowing prospects.
Rabobank Nederland Australia Branch (Rabobank) (AAA/Aaa) launched an increase of a minimum A$400 million (US$373.1 million) to its July 2014 domestic bond maturity. The line, which has a total of A$650 million on issue prior to the tap pricing on April 22, was introduced in a fixed- and floating-rate offering on June 26 last year and has not previously been increased.