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The Australian Office of Financial Management (AOFM)'s first auction of residential mortgage-backed securities (RMBS) since Scott Morrison replaced Joe Hockey as Australia's federal treasurer saw zero volume sold despite bids being received in two of the four lines offered.
On October 22, Treasury Corporation of Victoria (TCV) (AAA/Aaa) priced a new, October 2028, benchmark bond in what is the borrower's first syndicated deal of 2015. According to KangaNews data, TCV priced its previous syndication in February 2014. This A$33 million (US$24 million), November 2040 bond priced at 63.25 basis points over Australian government bond.
Westpac Banking Corporation (Westpac) (AA-/Aa2) lunched and priced a new, self-led, five-year, senior-unsecured domestic deal on October 22. According to KangaNews data, the issuer priced its most recent benchmark-sized deal in July this year. That dual-tranche – A$2.7 billion floating- and A$200 million fixed-rate – deal had pricing of 90 basis points over bank bills and semi-quarterly swap.
On October 20, Groupe BPCE (BPCE) (A/A2/A) priced its inaugural Australian tier-two transaction. According to KangaNews data, the deal is the second tier-two Kangaroo bond to be issued since 2007. Rabobank Nederland (Rabobank) issued a similar transaction in June this year.
Australian government's FSI response endorses APRA on capital and promises retirement-income changes
The Australian government delivered its response to the financial-system inquiry (FSI) on October 20, accepting virtually all the inquiry's recommendations – including all those relevant to debt markets. The response offers a ringing endorsement of the Australian Prudential Regulation Authority (APRA)'s path on bank capital requirements and lays out an agenda for provision of retirement income within the superannuation system.
On October 20, Macquarie Bank (Macquarie) (A/A2/A) confirmed the forthcoming launch of a new, three-year, senior-unsecured domestic benchmark bond. This announcement follows an update call with Australian and Asian investors which took place on October 19.
Local and offshore demand for Australian and New Zealand high-grade issuance has not been tempered by global volatility, according to the issuers of A$6.5 billion (US$4.7 billion) equivalent in a trio of deals. The local government and semi-government issuers say the transactions afforded up-to-date insights into investor views on Australia and its links to China.
Deal flow ramped up during the week under review, with A$5.875 billion (US$4.28 billion) priced in Australia alone. The Australian Office of Financial Management and the New Zealand Debt Management Office were in the spotlight, both pricing new nominal bonds via syndication.
KfW Bankengruppe (KfW) (AAA/Aaa/AAA) priced a tap to its April 2020 Kangaroo bond on October 16. According to KangaNews data, the deal is the third increase to the line which was introduced in January this year at volume of A$750 million (US$548 million) and pricing of 54 basis points over Australian government bond (ACGB).
On October 16, International Finance Corporation (IFC) (AAA/Aaa) mandated and priced a tap to its April 2025 Kangaroo bond. According to KangaNews data, this line was introduced in September 2014 and has been subsequently increased eight times, most recently by A$25 million (US$18.3 million) on October 2 at 46 basis points over Australian government bond.
On October 15, Western Australian Treasury Corporation (WATC) (AA+/Aa1) priced an increase to its July 2025 benchmark bond, in the borrower's fourth syndicated deal of 2015. According to KangaNewsdata, WATC priced its previous syndication on August 18. This A$750 million (US$542.3 million), July 2020 increase priced at 54.25 basis points over Australian government bond.