News
On July 20, the Australian Prudential Regulation Authority (APRA) revealed that from July 1 2016 it will be increasing the amount of capital required for Australian residential mortgage exposures by authorised deposit-taking institutions (ADIs) which use the internal ratings-based (IRB) approach. The latest measures affect Australia's major banks and Macquarie Bank – but leave the requirement for Australia's regional banks – which are already required to hold more capital – unchanged.
World Bank (AAA/Aaa) mandated the first increase of its March 2020 Kangaroo line on July 21. According to KangaNews data, the line was first introduced on March 4 this year for a volume of A$550 million (US$405.5 million) and pricing of 48 basis points over Australian government bond. This transaction is also the borrower's most recent visit to the Kangaroo market.
Westpac Banking Corporation (Westpac) priced a new, self-led domestic benchmark transaction on July 17. The 2020 maturity issue joins a clutch of deals executed in the Australian and global markets by Australian major banks in recent weeks, in both senior-unsecured and covered format.
Debt markets picked up during the week under review as the latest attempted Greek resolution opened the door for more than A$5 billion (US$3.7 billion) of new primary issuance. Western Australia avoided a ratings downgrade and KangaNews summarised 2015/16 sovereign and semi-government issuance expectations in a post-budget funding roundup.
DBNGP Finance (DBNGP) (BBB-/Baa3) launched and priced a new eight-year Australian dollar floating-rate note issue on July 17. Indicative price guidance for the forthcoming, curve-extending issue is in the area of 200 basis points over bank bill swap rate.
KfW Bankengruppe (KfW) (AAA/Aaa/AAA) priced an increase to its April 2020 Kangaroo bond on July 17. According to KangaNews data, the forthcoming deal will be the first supranational, sovereign and agency Kangaroo with tenor of less than 10 years to be issued since Inter-American Development Bank issued a A$50 million (US$37.1 million) tap of its February 2020 line on June 10.
Following the last of the round of federal and state budgets in Australia and New Zealand in May, June and July 2015, KangaNews summarises the 2015/16 issuance expectations of Australasia's seven largest government-sector funders. Data are provided in differing formats, but the clear trend is divergence in funding trajectories.
On July 16, QIC Shopping Centre Fund (A- by S&P) mandated a series of debt investor meetings in Asia and Australia to explore opportunities for a capital markets transaction. This issuer was last in the domestic market in November 2013, when it printed A$175 million (US$128.8 million) of six-year notes at 150 basis points over swap.
On July 15, Toronto Dominion Bank (TD Bank) (AA-/Aa1) launched and priced a new 18-month floating-rate note (FRN) transaction in the Australian market. The deal is TD Bank's second-ever Kangaroo, and its first in senior-unsecured format.
Standard & Poor's Ratings Services (S&P) resolved its negative credit watch on the state of Western Australia (WA) on July 14, affirming the state's AA+ rating – but retaining a negative outlook. The rating agency expects WA's revenue position to improve in the coming years, but warns that it has little flexibility for expenditure slippage within the AA+ band.