News

European Investment Bank (EIB) (AAA/Aaa/AAA) priced a tap to its August 2019 Kangaroo line on January 8, selling A$450 million (US$412.43 million) of bonds at a tighter margin than the previous 2019 Kangaroo – KfW Bankengruppe (KfW)'s (AAA/Aaa/AAA) A$350 million trade from the previous day. The increased line is now EIB's third largest in the market, with A$2.1 billion outstanding.

Having already increased its Kangaroo market outstandings by A$2.625 billion (US$2.44 billion) in less than a year – in the process leaping from 13th largest Kangaroo borrower to fifth – Inter-American Development Bank (IADB (AAA/Aaa/AAA) believes it can develop its Australian presence still further. The supranational priced its first deal of 2010 on January 8, selling A$750 million in a tap to its May 2014 line.

The third Kangaroo transaction to come to market in the first full week of the year is also the second long-dated offering, with the European Investment Bank (EIB) (AAA/Aaa/AAA) launching a tap to its August 2019 line on January 7. The only Kangaroo deal to price so far this year – from KfW Bankengruppe (AAA/Aaa/AAA) a day before EIB's launch – was also a 2019 maturity increase.

The Kangaroo deal placed on January 6 by KfW Bankengruppe (KfW) (AAA/AAA/AAA) – the first of 2010 – attracted predominantly offshore demand, according to the issuer. However, with one third of the paper picked up by domestic buyers KfW is hopeful that 2010 will be another strong year overall for the supranational, sovereign and agency (SSA) Kangaroo market.

The Inter-American Development Bank (IADB) (AAA/Aaa/AAA) launched the first primary deal of the year in the Australian market on January 6, in the form of an increase to its May 2014 Kangaroo. The tap, which will increase the line from its current size of A$1 billion (US$913 million) is expected to price "in the near future subject to market conditions" by lead managers Commonwealth Bank of Australia and HSBC.

Sources in the bank funding and liquidity management sectors say the extension to the Australian Prudential Regulation Authority (APRA)'s process of revising its capital and liquidity requirements – which was revealed in a letter from the regulator to authorised deposit-taking institutions (ADIs) on December 18 – came as no surprise. And the response to the extension is generally positive, with most arguing it is worth taking the necessary time to produce the best possible outcome.

Westpac Banking Corporation (Westpac)'s (AA/Aa1/AA-)  first residential mortgage-backed securities (RMBS) deal since May 2007 was upsized to A$2 billion (US$1.76 billion) for pricing on December 18. The Series 2009-1 WST Trust (WST 2009-1) was launched as an offering of a minimum of A$920 million in class A senior notes, with a further A$80 million divided between two subordinated tranches.

On December 15, Stockland Trust Management (Stockland) (A-) issued a A$300 million (US$272 million) fixed rate February 2015 bond after finalising the buyback of A$175 million of outstanding paper from its June 2011 line. It is understood that there was a narrow window of opportunity for the deal to be completed before the holiday slowdown, with deal sources confirming the buyback component of the transaction made it a likely candidate to be successful in this small timeframe.   

Westpac Banking Corporation (Westpac) (AA/Aa1/AA-) has launched the first residential mortgage-backed security (RMBS) deal from a big four domestic bank since the same firm's last foray into the asset-backed market in May 2007. The Series 2009-1 WST Trust (WST 2009-1) was launched as an offering of a minimum of A$920 million (US$832.88 million) in class A senior notes, with a further A$80 million divided between two subordinated tranches.

The closing of an innovative philanthropic bond deal from the University of Canterbury (Canterbury Uni) (NR) headlined a busy New Zealand market last week, with the total volume of issuance reaching NZ$565 million (US$409 million). There are also hopes that Canterbury Uni's strategy can be replicated by other funders in the university space.

Following Royal Assent to the Tax Laws Amendment Act 2009 on December 4, all Commonwealth government securities (CGS) are now legally eligible for exemption from the non-resident interest withholding tax (IWT). Although intermediaries say there has not been an immediate impact in terms of buying activity from offshore, they remain hopeful that the removal will stimulate offshore demand for inflation-linked CGS product in particular.  

Market users have offered a broadly positive response to a consultation paper from the Australian Securities and Investments Commission (ASIC) proposing a streamlined prospectus process for strong corporates who wish to issue retail bonds. And some believe the eventual result of the consultation could be a retail market offering Australian corporates a valid third option to wholesale and bank funding.