News

Lead managers on the first Australian residential mortgage-backed security (RMBS) issue of 2010 – AMP Bank's A$1 billion (US$902.8 million) Progress Trust 2010-1 (Progress 2010-1) transaction that priced on January 22 – say the market has picked up where it left off late last year in terms of returning confidence. A healthy pipeline of deals is predicted, as well as the return of offshore currency issuance by Australian firms.

Excess demand for the January 19 tender of A$300 million of 2025 Treasury indexed bonds (TIBs) by the Australia Office of Financial Management (AOFM) allowed New South Wales Treasury Corporation (TCorp) to place A$150 million of its own 2025 inflation-linked line on January 21. The AOFM's tender was more than three times oversubscribed while TCorp saw a cover ratio of over two.

The Kauri market reopened on January 21 with Asian Development Bank (ADB) (AAA/Aaa/AAA) issuing NZ$225 million (US$162.18 million) of paper in a January 2014 maturity – its debut deal in the New Zealand market. The bond was priced at 62 basis points over the April 2013 New Zealand government bond, which equates to around 22 basis points over swap.

Queensland Treasury Corporation (QTC) (AA+/Aa1) equalled the size of the largest ever Australian bond deal with the January 21 pricing of A$4 billion (US$3.65 billion) in its new November 2014 benchmark line. The deal matches the size of the Australian Office of Financial Management's return to the inflation-linked market in September last year.

The New Zealand domestic market is up and running with a trio of deals slated to open over the coming weeks. A transaction from Meridian Energy (Meridian) (BBB+) is already underway, while deals from Fonterra Cooperative Group (Fonterra) (A+/AA-) and Auckland City Council (Auckland City) (AA-) are expected to launch toward the end of February or early in March.

Inter-American Development Bank (IADB) (AAA/Aaa/AAA) launched its third Kangaroo deal of the month on January 21, announcing that it will price a new May 2013 line in the near future. Having already issued A$900 million (US$819.9 million) in a brace of Kangaroo transactions this year – both of them increases to existing lines – IADB's new deal is likely to make it the biggest Kangaroo issuer of 2010.

Sources close to the firm say Bank of America Merrill Lynch (BoA)'s hire of 11 sales and trading staff from RBS Australia (RBS) marks a concerted push by the US bank to beef up its Australian fixed income, currency and commodities (FICC) operation. Although neither BoA nor RBS is commenting on the hires, sources close to both firms emphasise that the 11 did not, as reported elsewhere, make a up a team at RBS but instead filled various roles across its markets division.

The Australian domestic market reopened on January 20 with the pricing of a A$900 million (US$825.12 million) new January 2013 maturity for Rabobank Nederland Australia Branch (Rabobank) (AAA/Aaa). The transaction was subsequently upsized by a further A$150 million a day after initial pricing.

The debut Kauri deal from Asian Development Bank (ADB) (AAA/Aaa/AAA), which launched on January 20, is also the first Kauri transaction to launch in 2010. The issuer is bringing a new four-year deal in what will be the first New Zealand market trade from a supranational, sovereign and agency (SSA) issuer since World Bank (AAA/Aaa/AAA) priced a brace of taps in early December last year.

On January 20 Queensland Treasury Corporation (QTC) (AA+/Aa1) announced it will place a new November 2014 maturity bond line via syndication but without federal government guarantee. With QTC having applied for and received a guarantee on all its outstanding lines with maturities from 2011 to 2021, the new bond will be its only unguaranteed mid-curve price point.

With the January 19 pricing of a A$650 million (US$) to European Investment Bank (EIB)'s (AAA/Aaa/AAA) August 2013 Kangaroo aggregate issuance from supranational, sovereign and agency (SSA) borrowers in the Australian market passed its all-time monthly record. A total of A$4.675 billion of SSA Kangaroos has been sold in January 2010, beating the previous peak of A$4.33 billion from November last year.

While the early wave of issuance from supranational, sovereign and agency (SSA) Kangaroo borrowers continues, on January 19 Rabobank Nederland Australia Branch (Rabobank) (AAA/Aaa) launched a deal which is set to become the first Australian market transaction of the year from a non-SSA institution and the first from a domestic issuing entity.