News
KfW Bankengruppe (KfW) (AAA/Aaa/AAA) priced the second increase to its May 2020 Kauri bond on September 16. According to KangaNews data, the line was introduced in May this year at volume of A$650 million (US$412 million) and pricing of 22 basis points over mid-swap. On August 21 the line was increased by a further A$300 million at 25 basis points over mid-swap.
Analysts and markets appear to see a potential upside for the Australian economic outlook in the wake of the country's latest change in prime minister – but only a limited one. Indeed, any positive market response to the dramatic events of September 14 in Canberra was quickly overtaken by global economic realities.
Suggestions that the Australian Office of Financial Management (AOFM) was continuing to stick to its firm line on reserve pricing were confirmed after its fourth auction of residential mortgage-backed securities (RMBS), at which less than A$80 million (US$57.1 million) – the lowest volume of the auctions to date – was sold.
The issuer and arranger of the latest noncomforming Australian residential mortgage-backed securities (RMBS) transaction say investor demand for securitisation product remains solid, albeit at wider pricing levels, despite mid-year volatility. RedZed Lending Solutions (RedZed)'s eight-tranche RMBS – RedZed Trust Series 2015-1 – was upsized to A$250 million (US$177.9 million), from A$200 million at launch, on September 10.
Australian non-fnancial corporate activity was back to full swing in the second week of September, as Australia Pacific Airports Corporation and Telstra Corporation returned for their first domestic issuances since 2013. The Australian securitisation market was in action too.
Telstra Corporation (Telstra) (A/A2/A) rebuffed what appears to have been an appealing opportunity to issue globally in favour of returning to the domestic market, the issuer tells KangaNews in the wake of its first domestic deal since November 2013. Intraday execution did not negatively affect the outcome of the deal but was a necessary inclusion given the market backdrop, it adds.
Citibank Australia (Citi Australia)'s priced its first prime residential mortgage-backed securities (RMBS) deal of 2015 on September 11. The transaction – Securitised Australian Mortgage Trust 2015-1 – was upsized from an indicative volume of A$500 million (US$346.8 million) across three tranches.
On September 10, Firstmac mandated a series of residential mortgage-backed securities (RMBS) investor meetings in London and the US in the week commencing September 21, and in Australia in the week commencing September 28. Joint lead managers ANZ, National Australia Bank and Westpac Institutional Bank, say a transaction may follow.
On September 10, China Construction Bank Sydney Branch (CCB Sydney) (A/A1) launched and priced a new Australian dollar three-year floating-rate note (FRN) benchmark issue. According to KangaNews data, the deal is the borrower's second-ever issue in the domestic market following a debut A$400 million (US$282.2 million) three-year FRN in November 2013. That deal had pricing of 110 basis points over bank bills.