News
On March 1, Westpac Banking Corporation (Westpac) announced the launch of a consent solicitation to amend existing hard-bullet covered bonds to soft-bullet format. Westpac is the second Australian issuer to seek to make this type of amendment after the majority of holders of Commonwealth Bank of Australia (CommBank)'s existing hard-bullet covered bonds approved a request to amend its programme in September last year.
The new five-year transaction mandated by Rabobank Nederland Australia Branch (Rabobank Australia) (A+/Aa2/AA-) on February 25 priced a day later. According to KangaNews data, Rabobank Australia's most recent previous Australian benchmark deal priced in April last year. This A$500 million (US$362 million) long two-year line had an issue margin of 65 basis points over bank bills.
On February 29, Commonwealth Bank of Australia (CommBank) (AA-/Aa2/AA-) revealed plans to engage with investors on a potential RMBS transaction off its Medallion programme. According to KangaNews data, CommBank issued under this programme twice in 2015, each for A$2 billion (US$ 1.4 billion).
The last week of February saw limited deal flow once again. However, CNH Capital priced a A$350 million (US$253.2 million) asset-backed transaction as the market-opening securitisation deal for 2016. Meanwhile, Westpac Banking Corporation brought the first new tier-two deal of the new year and Fonterra Co-operative Group reopened Australasia's corporate bond market.
The bookbuild on the new tier-one hybrid offer for Commonwealth Bank of Australia (CommBank) was completed on February 24, with A$910 million (US$647.8 million) allocated under the broker firm offer. In a statement lodged with the Australian Securities Exchange (ASX), the issuer also revealed that the margin was set at 520 basis points over bank bill swap rate (BBSW) – the tight end of the 520-535 basis points over BBSW indicative range.
After several weeks of limited activity – and deal flow largely limited to the most vanilla assets – the Australian market is showing signs of being ready to explore a wider range of transactions. The market's first asset-backed securities (ABS) deal of the year launched on February 24, followed later the same day by a new major-bank tier-two mandate.
On February 24, Svenska Handelsbanken (AA-/Aa2/AA-) priced a new transaction in the Australian dollar market. According to KangaNews data, the forthcoming line will be Svenska Handelsbanken's first Kangaroo foray since 2014. That two-tranche, A$650 million (US$465.1 million) five-year deal was divided between A$450 million fixed and A$200 million floating-rate notes, with pricing of 95 basis points over semi-quarterly swap and bank bill swap rate respectively.
Click here to see in-depth coverage of one of the most critical topics in the contemporary fixed-income market: trading liquidity. This coverage comes from the KangaNews DCM Summit 2016, which was held in Sydney on February 22-23.