News
On 6 May, expected ratings were assigned by S&P Global Ratings and Fitch Ratings to Firstmac's potential residential mortgage-backed securities (RMBS) deal, Firstmac Mortgage Funding Trust No. 4 Series 2-2019 (Firstmac Series 2-2019). The deal has indicative total volume of A$500 million (US$348.8 million). ANZ, J.P. Morgan, National Australia Bank, Standard Chartered Bank, United Overseas Bank and Westpac Institutional Bank were mandated for the potential deal on 24 April.
While Australia’s major banks took advantage of record liquidity and competitive pricing in their home market in the first quarter of 2019, European bank issuance enjoyed an upswing of its own. European market sources say the positive environment has been supported by an economic backdrop that is neither as bad as it has been nor as good as it could be.
The first quarter of 2019 produced the highest volume of Australian big-four domestic senior funding since the financial crisis – without a commensurate uptick in deal quantity. Bank funders say the local market has deepened and become more reliable, but with funding tasks stabilising they also do not want to lose focus on offshore-market presence.
According to senior executives at MUFG Bank (MUFG), appetite for Australian assets from Japanese and Asian investors has shown no sign of slowing. The range of funding markets open to corporate Australia continues to expand as a result, with the burgeoning Samurai loan market a particular focus for the bank.
On 3 May, AMP Bank mandated ANZ, Commonwealth Bank of Australia, Deutsche Bank, MUFG Securities and National Australia Bank to engage investors regarding a potential Australian dollar denominated residential mortgage-backed securities (RMBS) transaction from the bank’s Progress programme.
There were only three transactions in the Australian market during the last few days of April and the first few days of May. In addition to a June 2029 Kangaroo tap by International Finance Corporation, Suncorp-Metway printed A$500 million (US$349.8 million) and Canadian Imperial Bank of Commerce Australlia Branch priced A$400 million in respective three- and one-year floating-rate note transactions.
Australia’s mutual and customer-owned banks – often the forgotten sector of the local lending market – are at a critical juncture. The competitive environment presents an unprecedented growth opportunity but to take advantage many mutuals may need to overhaul their funding and capital strategies.
The first-ever KangaNews Mutual Sector Wholesale Funding Seminar took place in Sydney on 13 February 2019. As well as an in-depth exploration of the present and future of mutual funding strategy, the seminar covered a range of themes relevant to the sector including securitisation, the Australian housing market, investor relations and the forthcoming, federal-government backed, Australian Business Securitisation Fund.
The global derivatives community gathered in Hong Kong in April for the International Swaps and Derivatives Association (ISDA) AGM, with interbank offered rate (IBOR) transition top of the agenda. Progress towards a new market paradigm continues to be made but the scale of a task in which cash markets have a key part to play cannot be underestimated.
On 1 May, Canadian Imperial Bank of Commerce Australian branch (CIBC Australia) (A+/Aa2/AA-) launched a benchmark, one-year, senior-unsecured, floating-rate note (FRN) deal. The forthcoming transaction has indicative price guidance in the area of 41 basis points over three-month bank bills. HSBC, National Australian Bank and Westpac Institutional Bank are joint lead managers.
On 1 May, Vector (BBB/Baa1) revealed plans for a NZ$200-250 million (US$133.5-166.8 million) six-year deal for institutional and New Zealand retail investors. Full details of the transaction are expected to be announced on 10 May, while the rate set date is 16 May. ANZ, Deutsche Craigs, Forsyth Barr and Westpac Banking Corporation New Zealand Branch are joint lead managers.