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The absence of steady domestic corporate deal flow was an advantage for SGSP Australia Assets (SGSPAA)'s recent transaction. The borrower says lack of competing flow allowed it to make the most of demand in the seven-year part of the curve, adding that investor engagement with the transaction was very positive and demonstrates a level of maturity in the domestic market.
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.