Latest News
Financial institution (FI) deal flow in the Australian domestic market has started to pick up. It was slow to get off the mark in 2014, partly due to the competitiveness of offshore pricing. While bank funding executives agree that relative pricing between domestic and international options is little changed from the start of the year, solid investor appetite for Australian-dollar paper is drawing them to issue at home.
African Development Bank (AfDB) (AAA/Aaa/AAA) priced a new five-year Kangaroo transaction on February 18, in what will be the issuer's first Australian-market deal to price in 2014. The new bond fits into the mid-point of AfDB's fixed-rate Kangaroo curve: it has outstanding lines maturing in 2016, 2018, 2022 and 2024 according to KangaNews data.
On February 18, Western Australian Treasury Corporation (WATC) (AA+/Aaa) priced a new fixed-rate October 2018 transaction in the domestic market in what is the borrower's first syndicated deal of the year. According to KangaNews data, WATC priced its previous syndicated domestic deal on December 5, a four-year floating rate note issue with a volume of A$600 million (US$542.8 million) and pricing of 12 basis points over bank bill swap rate.
Fonterra Co-operative Group (Fonterra) (A+/AA-) has announced the launch of a dual-maturity domestic deal, comprising a minimum of NZ$100 million (US$83.6 million) in each of its six- and eight-year tranches.
On February 19, KfW Bankengruppe (KfW) (AAA/Aaa/AAA) priced a third increase of its A$700 million (US$632.6 million) March 2024 Kangaroo line. According to KangaNews data, the line was introduced in September 2013 with a volume of A$300 million and pricing of 93.5 basis points over Australian government bonds (ACGB).
Sky Network Television (Sky) (NR) revealed on February 18 that it is considering a retail bond offering of up to NZ$100 million (US$83.6 million), with full details of the seven-year offer expected to be confirmed in the subsequent two weeks. This will likely be the first new corporate bond transaction the New Zealand market this year; on February 13 Contact Energy (Contact) (BBB) confirmed a replacement offer for its retail bonds maturing on May 15 this year.
The results of a recent survey of retired self-managed superannuation fund (SMSF) trustees suggest these fund holders are broadly satisfied with an asset-allocation profile which affords little weight to fixed-income product. Meanwhile, although most of the surveyed SMSF investors hold at least some fixed-income assets – and more plan to do so – there appears to be little interest in annuities.
Commonwealth Bank of Australia (CommBank)'s first residential mortgage-backed securities (RMBS) issue of the year priced on February 14. The forthcoming transaction, Medallion Trust Series 2014-1, totalled A$2.511 billion (US$2.258 billion) across five tranches – including a soft-bullet note.
Deal flow started to pick up in the second week in February. In Australia, Westpac re-opened the domestic benchmark market for major banks in 2014 with a new A$3 billion (US$2.6 billion) dual-tranche five-year issue, while Goldman Sachs Group returned to the Kangaroo market. Meanwhile in New Zealand, Westpac NZ has built the largest domestic credit bond with a tap to its 2018 line.
Goldman Sachs Group (Goldman Sachs) (A-/Baa1/A) priced a new Kangaroo dual-tranche transaction with an August 2019 maturity on February 14.
Westpac Banking Corporation (Westpac) (AA-/Aa2/AA-) priceda new, self-led five-year Australian dollar deal on February 14, becoming the first of Australia's big-four banks to launch a domestic benchmark in 2014. According to KangaNews data, the borrower's previous domestic issue was a A$900 million (US$805.1 million) covered bond placed in November last year. That deal priced at 85 basis points over semi-quarterly swap.
On February 14, Bank Nederlandse Gemeenten (BNG Bank) (AA+/Aaa/AAA) priced a new four-year line in what is the borrower's fourth Kangaroo deal in 2014. According to KangaNews data, BNG Bank last priced a deal in the Australian market on January 29. That transaction had a volume of A$25 million (US$22.3 million) and pricing of 69 basis points over semi-quarterly swap.