News
The issuer of Australia's latest domestic tier-two transaction has shared its perspectives on tier-two capacity in local and offshore markets. Despite staying at home for its new deal, National Australia Bank (NAB) reaffirms that, in a funding environment which may require borrowers to be more nimble than ever, the more options available the better.
Australian deal flow during the month to March 20 has been particularly notable in the senior credit and securitisation sectors, with a total of A$6.7 billion (US$5.2 billion) and A$5.8 billion priced in each market respectively so far in 2015. With significant volume now in the books the intermediary league tables for these markets are starting to take shape.
Sumitomo Mitsui Banking Corporation Sydney Branch (SMBC Sydney) (A+/A1/A-) priced a new benchmark Australian dollar transaction on March 24, in its first-ever five-year domestic deal. The transaction extends the borrower's curve by a further three years, to 2020.
The Australian Office of Financial Management (AOFM) priced the syndication of a new 2.75 per cent 2035 nominal bond on March 24. The transaction priced at 48 basis points over EFP, versus initial price guidance of 46-51 basis points over the implied bid yield for primary 10-year Treasury bond futures contract.
In an announcement lodged with the Australian Securities Exchange (ASX) on March 23, National Australia Bank (NAB) reveals it has closed its capital notes offer with a final volume of A$1.34 billion (US$1.05 billion). Following the bookbuild phase, the transaction had been increased to A$1.25 billion from A$750 million.
Markets were quiet during the week under review, with only two deals pricing. National Australia Bank pinted A$1.1 billion (US$844.9 million) in its first domestic new-style wholesale tier two, while BHP Billiton Finance made a domestic return placing the market's joint largest non-financial corporate deal.
Investors say the outcome achieved in the Australian dollar market's joint largest non-financial corporate transaction shows that, despite claims to the contrary, sizeable volumes can be placed without execution risk. They also note that a softer sector-specific market backdrop has not affected demand, although they say the tone might be marginally reflected in pricing.
On March 19, National Australia Bank (NAB) (AA-/Aa2) priced the Australian market's first new-style tier-two issue for 2015. The self-led deal is NAB's debut Basel III-compliant tier-two transaction in Australia.
Following the execution of the first wholesale-only tier-one issue in the Australian market since the global financial crisis the transaction's issuer and lead managers reveal the extent of the institutional bid for what is traditionally a retail product. Interest in this funding avenue may grow, they say, but its usefulness may be restricted to a particular subset of issuer.
On March 20, Crown Resorts (Crown) announced it had closed the bookbuild for its subordinated notes II issue – the Australian market's first corporate hybrid issue for 2015 – and set the margin at the tight end of the proposed range. The issue is Crown's second corporate hybrid in the local market, following a A$535 million (US$410.5 million) deal launched in September 2012.