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The bookbuild on the new tier-one hybrid offer for Commonwealth Bank of Australia (CommBank) was completed on February 24, with A$910 million (US$647.8 million) allocated under the broker firm offer. In a statement lodged with the Australian Securities Exchange (ASX), the issuer also revealed that the margin was set at 520 basis points over bank bill swap rate (BBSW) – the tight end of the 520-535 basis points over BBSW indicative range.
After several weeks of limited activity – and deal flow largely limited to the most vanilla assets – the Australian market is showing signs of being ready to explore a wider range of transactions. The market's first asset-backed securities (ABS) deal of the year launched on February 24, followed later the same day by a new major-bank tier-two mandate.
On February 24, Svenska Handelsbanken (AA-/Aa2/AA-) priced a new transaction in the Australian dollar market. According to KangaNews data, the forthcoming line will be Svenska Handelsbanken's first Kangaroo foray since 2014. That two-tranche, A$650 million (US$465.1 million) five-year deal was divided between A$450 million fixed and A$200 million floating-rate notes, with pricing of 95 basis points over semi-quarterly swap and bank bill swap rate respectively.
Click here to see in-depth coverage of one of the most critical topics in the contemporary fixed-income market: trading liquidity. This coverage comes from the KangaNews DCM Summit 2016, which was held in Sydney on February 22-23.
On February 22, CNH Industrial Capital Australia (CNH Capital) revealed plans to update investors in its receivables trust programme while Volkswagen Financial Services (VWFS) disclosed its intention to carry out a series of conference calls for asset-backed investors in its Driver Australia programme.
Deal activity picked up, albeit moderately, during the second last week of February. Four Kangaroos priced from SSA issuers, the largest being a A$200 million (US$142.3 million) tap to KfW Bankengruppe's January 2019 line. National Australia Bank also printed a new three-year, floating rate note in the Australian market.
On February 18, KfW Bankengruppe (KfW) (AAA/Aaa/AAA) priced an increase to its January 2019 Kangaroo line. This is the fourth tap to the bond and the first since November 2014, according to KangaNews data. It has A$1.3 billion (US$932 million) on issue ahead of the tap.
Securitisation market participants say the slow start to the issuance year in their sector comes as no surprise given wider market conditions. They also acknowledge ongoing demand challenges that could shave volume off deals from the largest issuers in particular – but remain confident that deals will come through, and be available to a diverse range of issuers.