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Bendigo and Adelaide Bank (BEN) (A-/A2/A-) priced a new four-year floating rate note (FRN) issue to the domestic market on May 8 – the bank's first domestic transaction since its three-year senior unsecured line in October 2012 and the second wholesale issue since Bendigo Bank and Adelaide Bank merged in November 2007.
J.P.Morgan Chase & Co (J.P.Morgan Chase) (A/A2/A+) priced a new five-year Kangaroo deal on May 7 in what will likely become the third Kangaroo from a US financial institution (FI) to price in 2013. Wells Fargo & Company was the first US FI to place bonds in the Australian dollar market this year, selling A$900 million (US$922.6 million) of five-year fixed- and floating-rate notes at 100 basis points over swap and bills on January 17. A week later Citigroup placed a A$500 million dual-tranche 2018 deal at 150 basis points over swap and bills.
The much-discussed trading of Australian Commonwealth government bonds (ACGBs) on the Australian Securities Exchange (ASX) will commence on May 21, the exchange and Australian Office of Financial Management (AOFM) revealed on May 8. The ASX will list CHESS depository interests (CDIs) on nominal and inflation-linked government bonds, allowing retail investors theoretical access to the full volume of outstanding securities.
Analyst responses to the May 7 rate cut by the Reserve Bank of Australia (RBA) largely coalesce around the view that the 25 basis point cut was a marginal call based on benign inflation conditions, with weaker employment data also contributing. Commentary points out the RBA's language in explaining the cut did not vary significantly from that outlining recent decisions to hold, supporting existing views on reserve bank tone.
Lend Lease Group (Lend Lease) issued its first-ever domestic bond issue in the Australian market late last week, citing a desire to diversify its funding base and a match with its maturity profile needs as the motivation for selecting Australian dollar issuance over appealing options elsewhere. The issuer says the transaction was met with strong demand and more AUD issuance is likely in order to fill further funding requirements.
Dexus Property Group (Dexus) returned to the US private placement (USPP) market at the start of the month, with the issuer citing favourable pricing as its motivation. The firm says its long-dated transaction was met with good demand and significant oversubscription.
On May 6 the Australian Prudential Regulation Authority (APRA) released a second consultation paper covering Australia's Basel III liquidity reforms, revealing it does not plan to follow the lead of the Basel Committee on Banking Supervision (BCBS) by easing the requirements on banks – or the timeline for their implementation.
Diverse deal flow has picked up as one residential mortgage-backed securities (RMBS) and four vanilla domestic deals priced in Australia while one deal priced in New Zealand. The most significant deal, which also closed the week, was Lend Lease group's debut dual-tranche issue to the Australian domestic market.
On May 3, Lend Lease Group priced a new dual tranche deal in the Australian market, the issuer's first-ever domestic bond issue. The company has previously issued in Australia through offshore entity Lend Lease (US) Finance, but not since it placed a six-year Kangaroo deal with a volume of A$500 million (US$512.62 million) in November 1999.
In its half-year results announced on May 3, Westpac Banking Corporation (Westpac) disclosed a further small increase in the deposit portion of its overall funding mix. At the end of March 31 this year, 59 per cent of Westpac's funding book was made up of customer deposits, up by 1 per cent over the six month period.
The announcement in early April of a massive programme of quantitative easing by the Bank of Japan (BoJ) is expected to suppress local bond yields even further and consequently force Japanese funds into international investments. But Japanese market watchers say that move has yet to begin, and the falling yen continues to cause repatriation of assets.