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The Australian Prudential Regulation Authority (APRA) has provided local banks with more detail around how the Australian liquidity coverage ratio (LCR) regime will work from implementation at the start of 2015. Significantly, in a January 30 letter to banks APRA reveals that the Reserve Bank of Australia (RBA) has determined that local banks can reasonably be expected to hold, in aggregate, 30 per cent of the total supply of Commonwealth and semi-government securities.
Strong demand, favourable market conditions and a desire to diversify funding drew ABN AMRO Bank (ABN AMRO) to issue its debut Kangaroo deal on January 29. Joint lead managers say similar true Kangaroo borrowers from the financial institution (FI) sector are expected to come to the market in the next couple of months off the bank of ABN AMRO's success.
International Finance Corporation (IFC) (AAA/Aaa) priced an increase to its June 2018 Kangaroo line on January 29. The deal is the second increase of the fixed-rate line which was introduced in May 2013 and later increased in November 2013.
Attractive pricing in offshore markets has seen the usual early-year providers of domestic AUD issuance opt to take funding outside the domestic market. While domestic AUD issuance volumes have lagged behind historical norms so far for the year, market participants tell KangaNews there is no shortage of demand and volumes are anticipated to pick up following Chinese new year.
Activity ramped up in the financial institution sector with Bendigo and Adelaide Bank bringing Australia's first wholesale-only issue of Basel III-compliant bonds and issuance finally getting underway for 2014 in the senior-unsecured sector. Elsewhere, Fonterra helped turn the spotlight back onto the Dim Sum market.
On January 23, GE Capital Australia Funding (GE Capital) (AA+/A1) priced a tap to its September 2020 domestic line. According to KangaNews data, the deal is the first increase of the line which was introduced in August 2013 with a volume of A$200 million (US$176.7 million) and pricing of 130 basis points over semi-quarterly swap.
On January 23, Rabobank Nederland Australia Branch (Rabobank Australia) (AA-/Aa2/AA-) priced a new five-year benchmark Australian dollar transaction. The senior-unsecured transaction is the first such domestic AUD deal of the year, but follows closely behind Australia's first wholesale-only issue of tier-two bank debt under Basel III rules, which was priced on January 21 by Bendigo and Adelaide Bank.