News
Deals from Toronto-Dominion Bank (TD Bank) and BNP Paribas continued the recent run of global financial institution (FIs) issuance in Australian dollars. Lead managers say higher-yielding product from global borrowers is proving attractive to investors in a rallying but low-rates market, to the extent that BNP Paribas was even able to print a rare additional tier-one deal from a non-Australian issuer.
AusNet Services (AusNet) (A-/A3) revealed plans for an Australian dollar denominated 10-year benchmark deal on 10 July. The issuer will undertake a series of investor meetings in Asia and Australia during the week of 16 July, via ANZ, HSBC and National Australia Bank.
On 10 July, Bank of Montreal (BMO) (A+/Aa2/AA-) launched its inaugural bail-inable, five-year benchmark Kangaroo deal. Indicative price guidance for the forthcoming transaction, which is being offered in either or both of fixed- and floating-rate formats, is 105 basis points area over swap benchmarks.
The nascent green, social and sustainability (GSS) bond space in New Zealand continued to advance on 3 July, when Auckland Council became the market’s first repeat GSS issuer. Deal sources cite greater acceptance of green as an asset class as further evidence of market maturity.
On 9 July, People’s Choice Credit Union (People's Choice) revealed plans for a new residential mortgage-backed securities (RMBS) deal, Light Trust 2019-1. The forthcoming transaction has indicative total volume of A$500 million (US$347.8 million). A series of investor meetings will be organised in London in the week commencing 15 July and Sydney in the week commencing 22 July. National Australia Bank is the arranger, and is also joint lead manager alongside ANZ, Macquarie Bank and Westpac Institutional Bank.
Bank of Montreal (BMO) (A+/Aa2/AA-) began taking indications of interest for an inaugural bail-inable, five-year benchmark Kangaroo deal on 9 July. The transaction will be offered in either or both fixed- and floating-rate formats with initial price guidance of 105 basis points area over swap benchmarks. The notes are expected to be rated A-/A2/AA-.
The Australian Prudential Regulation Authority (APRA) has reduced the incremental total-capital uplift initially required of Australia’s big-four banks under its total loss-absorbing capacity (TLAC) equivalence regime. The regulator believes it should be possible for Australian banks to fund a smaller initial uplift with tier-two securities rather than via a new asset class.
On 9 July, International Finance Corporation (IFC) (AAA/Aaa) launched a new A$300 million (US$209.1 million) minimum, five-year Kangaroo deal. The forthcoming transaction has indicative price guidance of 34 basis points area over semi-quarterly swap, equivalent to 46.85 basis points area over Australian Commonwealth government bond. Pricing is expected the day after launch, according to joint lead managers J.P. Morgan, Nomura and TD Securities.
The first week of July was highlighted by Toronto-Dominion Bank's A$1.25 billion (US$877.6 million) five-year deal and two Australian dollar EMTN transactions. One was from BNP Paribas, with a A$300 million additional tier-one, and the other BOC Aviation's A$200 million 10-year print. Meanwhile, Auckland Council issued a NZ$150 million (US$100.1 million) six-year green bond.
On 5 July, Trustpower (NR) completed the bookbuild for its NZ$100-125 (US$70.2-87.8 million) seven-year senior-unsecured domestic deal. The interest rate has been set at the minimum, 3.35 per cent, after launching with a margin range of 175-185 basis points over mid swap. The offer is set to close on 24 July. Deutsche Craigs and Forsyth Barr are joint lead managers.
On 5 July, FlexiGroup revealed plans to engage with investors regarding a refinancing of several Q Card Trust tranches with soft-bullet maturities falling on 15 August 2019. The transaction may also be upsized.