The final semi-government funding programme for 2011/12 was released on July 4, with Queensland Treasury Corporation (QTC) (AA+/Aa1) targeting a figure of A$22 billion (US$23.6 billion) for the next financial year – up on the previous year's requirement of A$15 billion. The increase is largely the result of an increased capital spending projection: the forecast is for an increase to A$14.1 billion for the next financial year from just A$3.6 billion in 2010/11.
Investec Bank Australia (Investec) completed the first non-mortgage asset-backed securities (ABS) deal of the month on July 14, with sole lead manager ANZ announcing the pricing of A$214.8 million (US$231.1 million) of auto and equipment-lease backed securities. The deal, Impala Trust No 1 Series 2011-1, is Investec's second ABS in Australia following its A$240.7 million medical receivables issue in May last year.
On July 12 ANZ Banking Group (ANZ) (AA/Aa2) completed a buyback of A$495 million (US$525 million) of outstanding floating rate government-guaranteed notes. The offer was for up to A$1 billion outstanding in a June 2012 maturity, which was introduced at a size of A$800 million in January 2009 and subsequently tapped by a further A$200 million two months later.
Following a roadshow to domestic investors earlier in June, Fonterra completed (A+/AA-) its first-ever transaction in the Australian market on July 4 through its subsidiary, New Zealand Milk (Australasia). The A$300 million (US$322.5 million) deal has a five-year maturity, and was upsized from an indicative volume of A$200 million. It priced 5 basis points tighter than indicative pricing at 100 basis points over swap.
On July 5, Province of Québec (Québec) (A+/Aa2) priced the first Kangaroo deal in more than two weeks and the borrower's first such transaction since September 2005. Québec's previous Kangaroo issue was a A$150 million (US$161.6 million) tap to its July 2015 maturity, and that A$450 million line remains the issuer's only outstanding Kangaroo bond.
At the end of the first half of the year issuance in several sectors of the Australian bond market remained on target to pass annual records, with true corporate volume in particular way ahead of previous years despite a tailing off of primary market activity in June. The New Zealand domestic market in the first six months of 2011 fell just fractionally short of all-time issuance levels.
On July 1, AMP Bank (A/A2) launched and priced the first domestic transaction in a week and its second senior unsecured deal this year. The new A$250 million (US$267.8 million) June 2014 floating rate note (FRN) was upsized from a launch volume of A$150 million and priced at 120 basis points over the bank bill swap rate (BBSW). The issuer already has a February and April bond outstanding in the 2014 part of its domestic curve.
KangaNews has announced the best performers in its inaugural Fixed Income Research Survey, in which Australian investors were asked to recognise the performance of fixed income research across nine categories. Over 30 investment firms participated in the survey, representing the bulk of major institutional investment funds in the Australian market across the fund management, insurance and balance sheet sectors.
While renewed volatility caused by the European sovereign debt crisis has largely put a stop to issuance in recent days, intermediaries in New Zealand believe fundamental conditions are conducive to domestic deal flow with investors hungry for supply. However, a number of factors continue to limit issuance and therefore an influx of deals is still not expected to commence in the immediate future.