News

During the first week of May headlines focused on ANZ Banking Group, National Australia Bank (NAB) and Westpac Banking Corporation as each announced their half-year results. Hard on the heels of its announcement, NAB printed A$3.2 billion (US$2.36 billion) in its largest senior domestic deal to date, according to KangaNews data.

National Australia Bank (NAB) (AA-/Aa2) priced a new, senior-unsecured, Australian dollar benchmark on May 6, hard on the heels of announcing its half-year results. 

Wellington International Airport (Wellington Airport) (BBB+) priced NZ$75 million of seven-year bonds on May 6.The transaction is the fifth corporate transaction brought to the New Zealand market under retail documentation so far this year, reinforcing the fact that retail-format deals are now the norm in the domestic market.

On May 6, International Finance Corporation (IFC) (AAA/Aaa) priced an increase to its July 2026 Kangaroo bond. According to KangaNews data, the line was introduced on January 14 this year for volume of A$125 million (US$93.4 million) and pricing of 46 basis points over semi-quarterly swap. It has been tapped six times since, most recently for A$50 million at 50 basis points over swap on March 22.

GE Capital Australia Funding (GE Australia) (AA+/A1) disclosed on May 6 that it has repurchased more than A$665 million (US$491 million) of a possible A$1.35 billion in face value of its 2017, 2018 and 2019 fixed-rate and 2018 floating-rate senior-unsecured bonds. The cash tender offer formed part of a wider buyback targeting GE Capital's bonds in a range of currencies also including Canadian dollars and sterling.

National Australia Bank (NAB)'s half-year results for the six months ending March 31 – released on May 5 – show the bank's common-equity tier-one (CET1) ratio is tracking broadly as expected through a period of group-level overhaul. NAB's CET1 fell in the first half of its financial year, but it had generated a buffer above its own target range in advance of expected capital erosion.

The Australian Office of Financial Management (AOFM) confirmed on May 4 that its expected issuance for 2016/17 will once again be greater than the preceding year, following the release of the Australian Commonwealth budget on May 3. The AOFM expects to issue A$90 billion (US$67.5 billion) of Treasury bonds in its next financial year, including net new issuance of A$69 billion.

Half-year results released by ANZ Banking Group (ANZ) on May 3 highlight the extent to which the institutional arm of the bank is in the firing line of chief executive Shayne Elliott's drive to "build a simpler, better capitalised and more balanced bank". ANZ has cut its dividend payout, in part to further its goal of reinforcing its capital position.

The changing face of bank balance sheets is having a clutch of consequences for Australia's most recent issuer of nonconforming residential mortgage-backed securities (RMBS). Most notable are the issuer's decision to use a deal structure new to the Australian market in its latest transaction and the lending opportunities it is selectively addressing as they get spun out of the bank sector.

Wellington International Airport (Wellington Airport) (BBB+) disclosed to the NZX on May 2 that it has launched an offer of NZ$50-75 million (US$35.1-52.6 million) of seven-year bonds. Also on May 2, Insurance Australia Group (IAG) (AA-) revealed that it is considering an offer of NZ$250-350 million of subordinated convertible notes. Both offers will be targeted at New Zealand institutional and retail investors.

Westpac Banking Corporation (Westpac) reported its half-year results for 2015/16 on May 1, the first of three Australian major banks to do so in the first week of the new month. Westpac disclosed a further substantial increase to its common-equity tier-one (CET1) position, and also gave some detail about positioning for future regulatory outcomes on capital and funding.

Australian and New Zealand deal flow slowed as a holiday week in both countries affected the last week in April. While no transactions have yet priced, Australia saw its first non-government-sector, investment-grade corporate activity of the year as Port of Brisbane announced a debt investor update with potential transaction to follow.