News
Issuer and intermediaries say the first-ever Basel III compliant tier-two Kangaroo transaction shows institutional investors have reached a level of comfort with new-style instruments sufficient to enable further evolution of the product. Other offshore borrowers may be circling although market participants say other routes to issuance may be more appropriate for many.
Genworth Financial Mortgage Insurance Australia (Genworth) (A+/A3/A+) priced a new tier-two, floating-rate transaction on June 24. The deal is the third tier-two transaction to hit Australian screens in quick succession, following the pricing of deals from Heritage Bank and Rabobank Nederland's tier-two Kangaroo.
Subordinated issuance, in the form of Australia's first Kangaroo tier-two since 2007, was the focus in a week which saw limited new deals. On the other side of the Tasman Sea, Transpower New Zealand priced its first domestic transaction since 2013.
Following a series of investor meetings undertaken earlier this month, Rabobank Nederland (A+/Aa2/AA-) priced a new Australian dollar tier-two notes issue on June 25. The new deal, which comprises both fixed- and floating-rate notes, is the first such issue in the Kangaroo market since Wachovia Bank priced A$400 million (US$309.6 million) of 10-year bullet subordinated bonds in May 2007.
The Australian Office of Financial Management (AOFM) conducted the first planned auction under its programme to divest its remaining holdings of residential mortgage-backed securities (RMBS) on June 24. Shortly afterwards the AOFM also disclosed the details of the third planned sale, which is due to take place in August.
New Zealand primary market activity picked up in the third week of June, while it was more limited in Australia. Even so, one notable transaction came from Heritage Bank, which priced the first-ever Basel III-compliant tier-two deal from a mutual bank in Australia. *Registrations are now open for the 2015 KangaNews New Zealand DCM Summit on August 5 in Auckland.
Australia's first Basel III-compliant tier-two deal from a mutual bank represents a development of the market to accommodate new players, the issuer says. Heritage Bank tells KangaNews how it overcame the challenge of accessing the market, including the process of using write-off rather than conversion as its non-viability option.
FlexiGroup priced its second Flexi ABS Trust series asset-backed securities (ABS) issue of 2015 on June 16. The notes are backed by small-balance unsecured consumer loans originated by Certegy Ezi-Pay.