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Market conditions, demand dynamics and relative pricing are creating a compelling case for the EMTN – rather than Kangaroo – format to be used by international banks for Australian dollar tier-two issuance. Leads on the latest Australian dollar EMTN tier-two deal say both formats have their place, but if issuers are prepared to be flexible on volume the EMTN option can be appealing.
NRW.BANK (AA-/Aa1/AAA) priced its first Kangaroo transaction for almost a decade on July 14, following a mandate announcement the same day which revealed the issuer planned to print a new long 10-year deal. The German agency roadshowed in Australia and Japan in mid-January to discuss Australian dollar appetite.
On July 14, Westpac Banking Corporation (Westpac) (AA-/Aa2) launched a A$50 million (US$38 million) increase to its June 2026 line. According to KangaNews data, the line was introduced in December last year for volume of A$150 million and pricing of 120 basis points over semi-quarterly swap.
Export-Import Bank of Korea (Kexim) (AA-/Aa2/AA-) priced its inaugural Kauri bond transaction on July 14. According to KangaNews data, the NZ$350 million (US$253 million) five-year bond is the second Kauri issued without a triple-A rating – including Australian bank covered bonds – since May 2010, after Korea Development Bank (KDB) priced its debut Kauri transaction in April this year. This NZ$200 million transaction priced at 105 basis points over bank bill reference rate.
On July 13, Société Générale's (A/A2/A) Australian dollar tier-two subordinated transaction progressed launched and priced. Indicative volume on the 12-year non-call-seven maturity structure deal was A$200 million (US$151.9 million) with price guidance in the area of 320 basis points over semi-quarterly swap. The bonds will be issued off Société Générale's EMTN programme and are expected to be rated BBB/Baa3/A-.
The Australian Prudential Regulation Authority (APRA) revealed the results of a review of its high-quality liquid assets (HQLA) criteria on July 14. The regulator is making no changes to its definition of HQLAs and adds just one issuer to the list of qualifying names: Australia's Export Finance and Insurance Corporation (Efic).
In the wake of its debut domestic transaction, WSO Finance (A3/A-), the financing entity of the Westlink Motorway Group (Westlink) and a 50 per cent owned subsidiary of Transurban, says Brexit didn't derail the deal's execution schedule or negatively affect its ultimate outcome. Issuer flexibility around deal format enabled a rare 10-year floating-rate tranche to be added to the planned seven-year fixed-rate bond.