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On June 22, Firstmac priced the refinancing of the class A-2B (A) notes of its Mortgage Funding Trust Series 1A-2014 residential mortgage-backed securities issue. The new, Firstmac Mortgage Funding Trust Series 1A-2014 Class A-2R, have volume of A$297.5 million (US$221.9 million) – which will be used to refinance a short-term US dollar tranche issued when the deal was first brought to market in June 2014.
Following mid-June state budgets in Queensland and New South Wales, Queensland Treasury Corporation (QTC) and NSW Treasury Corporation (TCorp) have both released funding programme updates featuring borrowing-requirement projections dominated by refinancing. The states' issuance trajectories are relatively similar at headline level, though TCorp's is set to be altered dramatically by further forthcoming state-asset transactions.
In the wake of the state's May budget, which showed an expected sharp increase in the general government deficit in 2016/17, the treasurer of Western Australia (WA), Mike Nahan, told an investor and dealer panel lunch in Sydney on June 9 that WA remains focused on debt reduction via asset sales.
In the wake of Suncorp-Metway (Suncorp)'s fourth domestic covered bond transaction, the issuer reveals that solid domestic participation replaced a temporarily waning, potentially Brexit-induced, offshore bid. However, the selection of the covered-bond instrument, often viewed as a 'rainy-day' product, was not in response to any implied views around political or socioeconomic event risk.
On June 17, SGSP Australia Assets (SGSPAA) (BBB+/A3) launched and priced a new, seven-year Australian dollar issue. Indicative pricing was in the area of 185 basis points over semi-quarterly swap, the tight end of initial 185-190 basis points over semi-quarterly swap guidance that was revealed ahead of launch on June 16.
Suncorp-Metway priced a A$500 million (US$369 million) five-year covered bond - it's first since October 2014 - during the second week of June. Across the Tasman Sea, World Bank printed the Kauri market's largest-ever deal as it tapped its 2021 maturity notes by NZ$875 million (US$616.6 million).
The Local Government Funding Vehicle (LGFV) (Aa2) priced a new, 10-year Australian dollar transaction on June 17, with pricing at 145 basis points over semi-quarterly swap. This is the tight end of the initial 145-150 basis points over semi-quarterly swap guidance range that was provided to the market ahead of pricing on June 10.
A research report published by National Australia Bank (NAB)'s global markets credit research team on June 16 estimates that, in aggregate, the big-four Australian banks may need to raise more than A$120 billion (US$88.7 billion) of total loss-absorbing capacity (TLAC) by the regime's implementation date. However, even factoring in two key expected forthcoming regulatory changes to the estimate, the report suggests that the task – while substantial – should be manageable for the majors.