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In the latest of a regular series of commentaries following cash-rate decisions, KangaNews columnist, Warren Bird, reviews the Reserve Bank of Australia (RBA)'s September 2 statement to reveal the key changes according to his rigorous three-category analysis of the reserve bank's thinking.
On September 2, Asian Development Bank (ADB) (AAA/Aaa/AAA) priced a new March 2025 Australian dollar deal in the borrower's second Kangaroo transaction of 2014. According to KangaNews data, ADB most recently visited Australia in May this year with a dual-tranche, five-year transaction. That A$1 billion (US$932.9 million) fixed- and A$200 million floating-rate deal had pricing of 20 basis points over swap.
In the wake of its debut domestic transaction, Scentre Group (Scentre) says Australian dollar pricing was comparable to its European capital-markets debut. But while it hopes the transaction will be the first of many in Australia it retains a conservative outlook in terms of volume expectations of the domestic market.
The Australian Prudential Regulation Authority (APRA) confirmed on September 1 that it plans to ease the liquid-assets regime for branches of foreign banks registered as authorised deposit-taking institutions (ADIs). KangaNews exclusively revealed earlier the same day that the Australian regulator was poised to reduce the liquidity coverage ratio (LCR) requirement and effectively to loosen asset-class restrictions for this category of ADI.
KangaNews understands the Australian Prudential Regulation Authority could be close to changing the liquid-assets requirements for authorised deposit-taking institutions (ADIs) which are branches of offshore banks. Market sources say there are two key measures under consideration: one would likely reduce the volume of liquid assets these banks are required to hold, the other could clear the way for greater allocation to securities which do not qualify as high-quality liquid assets (HQLAs).
On September 1, the South Australian Government Financing Authority (SAFA) (AA/Aa1) announced its intention to issue up to A$1.5 billion (US$1.4 billion) of a new floating-rate note (FRN) benchmark issue. The indicative price range on the forthcoming December 2018 maturity bond is 7-10 basis points over bank bill swap rate (BBSW), SAFA says.
Challenger closed the bookbuild on its capital notes offer on August 29, increasing the offer to A$340 million (US$317.9 million) from A$250 million. According to an Australian Securities Exchange statement the margin was set at 340 basis points over bank bill swap rate (BBSW), the tight end of a 340-360 basis points range.
Deal flow remined consistent during the week under review with 10 transactions in total. Scentre priced its debut Australian dollar deal soon after visiting the euro and sterling markets in July this year. Meanwhile Goldman Sachs's new seven-year deal is the longest tenor from an issuer in the FI sector since the financial crisis.
Goldman Sachs Group (Goldman Sachs) (A-/Baa1/A) priced a new seven-year Kangaroo benchmark deal on August 29. The transaction is the first senior-unsecured Kangaroo benchmark with such extended tenor from an issuer in the financial institution (FI) sector since before the financial crisis, according to KangaNews data.
Rentenbank (AAA/Aaa/AAA) launched and priced a tap of its March 2020 Kangaroo line on August 29. According to KangaNews data, the new transaction is the fifth tap to this line, which was originally launched in March 2012 and was most recently increased in November last year.
The first release of second-round submissions to Australia's financial system inquiry reveals limited enthusiasm from market participants around the inquiry's interim report policy options concerning corporate bonds. A number of new submissions argue that easier access to retail issuance will make little difference to Australian corporate bond supply, while others reject the idea of removing dividend imputation as a way of levelling the tax playing field between equity and other asset classes.