Strong Australian dollar deal flow continued in the second full week in May with deals priced from a range of Kangaroo and local borrowers; the New Zealand market remained quiet. New Zealand and Australian budget announcments this week saw a host of activity from the ratings agencies. 

On May 17, Qantas Airways (Qantas) (BBB-/Baa3) priced an increase to its April 2020 line which KangaNews understands will be part of a broader offer with a public bookbuild. The increase will be the first tap to a line which was issued in April with a volume of A$125 million (US$122.79 million) and pricing of 295 basis points over swap.

On May 16 Asian Development Bank (ADB) (AAA/Aaa/AAA) became the latest issuer to take advantage of conducive Kangaroo issuance conditions, as the supranational priced an increase to the July 2017 bond it introduced last year. ADB plans to increase the bond’s fixed-rate line, which currently has A$900 million (US$889.2 million) on issue; it also has a A$200 million floating-rate tranche.

An improving budgetary position in New Zealand – including a reaffirmed projection of a return to surplus in 2014/15, ahead of Australia’s latest projections – allowed the New Zealand Debt Management Office (NZDMO) to lower its funding requirement for the next two financial years. Analysts suggest the NZDMO’s funding strategy could significantly reduce nominal tender supply in the coming year.