News
ING Bank Australia (ING Bank) (AA-) returned to the Australian market on September 30, taking away A$600 million (US$525.18 million) of three-year money at the tightest level yet seen for a government-guaranteed transaction of this duration in Australia. The fixed rate deal, which is also the first guaranteed AUD bond issue for three weeks, priced at a margin of 20 basis points over swap.
Investors both domestic and international have confirmed the lead manager group's view that the Australian inflation-linked sector has become an increasing focus of attention in the lead-up to pricing of the Commonwealth government's return as an issuer. The Australian Office of Financial Management (AOFM) launched its first treasury indexed bond (TIB) deal since 2003 on September 29.
A three-week break in Kangaroo market issuance was ended on September 29 by the European Investment Bank (EIB) (AAA/Aaa/AAA), with the issuer's A$550 million (US$480.92 million) 2014 increase also pushing annual Kangaroo volume for 2009 past last year's figure. Pricing on the transaction also marked a further tightening of margins for supranational, sovereign and agency (SSA) issuers in Australia.
New Zealand's Kiwibank (AA-) has confirmed its intention to become the first Kangaroo bond issuer outside the supranational, sovereign and agency sector for over two years, with the issuer planning to roadshow in Australia next week and follow investor meetings with a three- or five-year deal guaranteed by the New Zealand government.
A discussion paper issued by the Australian Prudential Regulation Authority (APRA) on September 11 could lead to the universe of securities considered liquid assets for banks' prudential purposes being slashed. Market sources tell KangaNews this could mean authorised deposit taking institutions (ADIs) will not be able to hold bonds from the semi-government or supranational, sovereign and agency (SSA) sectors in their liquidity books.
ANZ National Bank (ANZ National) (AA/Aa2/AA-) will issue NZ$225 million (US$157.84 million) of three-year bonds on September 18, bringing the total volume in three-transaction mini-flurry of New Zealand bank deals to over NZ$500 million. Institutional volume has also been boosted by the return of Kauri issuance in the form of Rentenbank's (AAA/Aaa/AAA) new 2014 from September 14.
On September 14 Rentenbank (AAA/Aaa/AAA) priced a new NZ$100 million (US$69.8 million) September 2014 Kauri bond, at 32 basis points over mid-swaps. This is the first Kauri deal priced since the end of July and Dean Spicer, head of debt capital markets New Zealand at lead manager ANZ, says the pricing level is evidence of the compelling rally in supranational, sovereign and agency (SSA) spreads in the last couple of months.
The two biggest funders in the Australian banking market have continued to take advantage of opportunities to issue government guaranteed debt offshore, with record-sized deals coming just before the US Federal Deposit Insurance Corporation reaffirmed plans to withdraw the debt guarantee portion of the local Temporary Liquidity Guarantee Program under any but the most punitive conditions.
Standard & Poor's (S&P) withdrew its AA- rating on ASX Clearing Corporation (ASXCC) on September 10, after the Australia Securities Exchange subsidiary revealed in its recent annual report that it would not be pursuing plans to raise A$145 million (US$124.79 million) via a fixed rate bond issue in either the domestic or US private placement (PP) market.
National Australia Bank (NAB)'s (AA/Aa1/AA) first unguaranteed five-year domestic transaction of 2009 gave another sign that margins in the Australian market are stabilising, with the issuer pricing a total of A$1.5 billion (US$1.29 billion) at 96 basis points over swap and bank bill swap rate (BBSW) in a self-led transaction on September 9.
A day after pricing of the first non-government supported residential mortgage-backed security (RMBS) transaction in Australia this year, CNH Capital Australia (CNH) priced a total of A$400 million (US$343.6 million) in a public and privately-placed agricultural and construction equipment-based asset-backed security (ABS), CNH Capital Australia Receivables Trust Series 2009-1.
Interest in the Australian inflation-linked sector is growing ahead of the return of sovereign issuance, with the expected removal of non-resident interest withholding tax (IWT) on commonwealth government securities (CGS) a particular draw for international buyers. Meanwhile there are signs that domestic allocations to the inflation sector are picking up ahead of an expected increase in supply.