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Market participants agree that increased relative value opportunities are a likely beneficial result of last week's credit correction, centred on US financial institutions' exposure to sub-prime debt and LBO finance.

Continuing its reputation for innovation in the international capital markets, on July 27 KfW Bankengruppe (KfW) became the first non-Asian international issuer to complete a Thai baht bond in the local capital market in Thailand.

Generally strong results announcements from a series of US banks have been universally impacted by increased provisions for retail bad debt, including ongoing concern regarding the sub-prime mortgage sector.

On July 24 the European Investment Bank (EIB) (AAA/Aaa/AAA) priced its inaugural NZ$400 million (US$323 million) five-year Kauri bond. This is the largest fixed rate note transaction in the Kauri bond market.
On Friday July 20 the World Bank (AAA/Aaa) priced its debut NZ$350 million (US$278 million) seven-year global Kauri bond.

Two supranationals have announced intentions to issue Kauri bonds and others are looking closely at the market as the Reserve Bank of New Zealand (RBNZ) announced an extension of its list of repo-eligible securities.

Effective September 3 2007, the RBNZ will broaden the range of securities acceptable for overnight reverse repo facility (ORRF) as a last resort facility for counterparties to access cash in exchange for security.

Kaupthing Bank (Aa3/A), Iceland’s largest financial institution, is roadshowing in Australia and hopes to issue its first publicly-placed Kangaroo as soon as short-term market conditions move in its favour.

Japan’s Orix Corporation (A-/Baa1) and its Australian subsidiary Orix Australia, which is subsidised by its parent and as such shares its credit rating, will roadshow in Australia at the start of August.

Standard & Poor's (S&P) has improved its outlook on the Canadian province of Québec (A+/A1/AA-) from neutral to positive on the back of a commitment to reduce its overall debt.

Participants at the recent ANZ/KangaNews forum in London and Sydney see ongoing opportunities for the Kangaroo market despite an increasingly competitive marketplace for triple-A issuers.

International Finance Corporation (IFC) (AAA/Aaa), the private sector arm of the World Bank Group, is understood to be working on documentation for a Kangaroo programme.