News
According to local investors, reduced domestic issuance levels in the banking sector from the record volumes seen in 2009 have not adversely affected pricing levels on bank deals. In fact, some say the steadier transaction flow this year is allowing the market to price offerings more rationally – although there is little sign that the home market premium is on the way out.
CNH Capital Australia (CNH) priced the first Australian asset-backed security (ABS) deal based on equipment loans of the year on April 7, with its A$350 million (US$324.5 million) Receivable Trust Series 2010-1 ABS line. The notes are backed by commercial hire purchase and mortgage contracts over agricultural and construction equipment.
Austria's export credit agency, Oesterreichische Kontrollbank (OeKB) (AAA/Aaa) revealed plans to visit Australia during the week beginning April 19 in a roadshow organised by Commonwealth Bank of Australia and UBS Investment Bank. The agency, which is explicitly guaranteed by the Republic of Austria (Austria) (AAA/Aaa/AAA), has never issued in the Kangaroo market.
At the expiry of the Australian government's guarantee on new wholesale bank funding on March 31, combined long-term issuance under the aegis of the scheme had passed the equivalent of US$130 billion at current exchange rates. A total of 16 banks issued under guarantee, with volumes ranging from Westpac Banking Corporation's equivalent of US$30.5 billion to Bananacoast Credit Union's US$37 million.
Two corporate transactions – a wholesale buyback and replacement offer from Adelaide Airport (BBB/Baa2) and a retailable deal from ALE Property Group (ALE) (NR) – priced at the turn of the month with margins on both suggesting a gradual firming of confidence in the Australian credit market by hitting slightly tighter levels than recent comparable trades.
The record for Kangaroo issuance in a single month has been broken with Rentenbank (AAA/Aaa/AAA) completing a A$250 million (US$228.5 million) new seven-year deal on the last day of March. Kangaroo issuance for the month is now at A$6.35 billion, marginally surpassing the all-time record of A$6.325 set in January this year.
The European Investment Bank (EIB) (AAA/Aaa/AAA) launched its second Kangaroo transaction in two weeks on March 31, announcing the forthcoming pricing of an increase to its August 2019 line. With its A$2.1 billion (US$1.9 billion) outstanding prior to the tap, EIB's 2019 Kangaroo is already one of the largest bonds in the market and a substantial increase could make it the second largest overall.
March looks set to be the second month in 2010 in which the all-time monthly issuance record for Kangaroos is broken with the latest trade from Rentenbank (AAA/Aaa/AAA) likely to push volume past the A$6.3 billion (US$5.8 billion) priced in January. In advance of pricing on the Rentenbank deal, which launched on March 30, a total of A$6.1 billion of Kangaroos had been placed in the month.
The Australian Office of Financial Management (AOFM) was one of nine investors in IMB's Illawarra Series Trust 2010-1 (Illawarra 2010-1) residential mortgage-backed securities (RMBS) transaction that priced on March 26. The Commonwealth government debt management agency took over half the deal's paper with an injection of A$157.5 million (US$143.3 million) out of the total A$300 million printed.
The buyback of existing December 2010 securities and replacement with a new, secured five-and-a-half year line by Adelaide Airport (BBB/Baa2) was confirmed in a March 26 deal launch. Adelaide Airport roadshowed the buyback and sale in mid-March with lead manager sources saying the period between roadshow and launch was spent gathering investor feedback and working on deal structure.
The first retail deal of 2010 opened on March 24 with ALE Property Group (ALE) (NR) offering to sell around A$100 million (US$90.8 million) of subordinated four-year notes with an indicative margin of 400-420 basis points over swap. The firm, which has only issued wholesale debt in commercial mortgage-backed securities (CMBS) format, says institutional demand for the new deal is substantial.
Nordic Investment Bank (NIB) (AAA/Aaa) priced its first Kangaroo of 2010 on March 25, selling A$600 million (US$546.8 million) in two tranches in its largest Australian market transaction. This deal follows hot on the heels of Asian Development Bank's (AAA/Aaa/AAA) $450 million tap priced a day earlier, although lead manager sources say the immediate Kangaroo pipeline may be set to ease.