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Westpac Banking Corporation (Westpac) completed the bookbuild on Australia's first new retail debt offer of the year on February 6, having upsized the Basel III-compliant, tier one hybrid transaction from an initial A$500 million (US$514.5 million) to A$1.25 billion. The bank had said an issue of the smaller target volume would add approximately 16 basis points to its tier one capital, which at the end of its 2011/12 financial year stood at 10.3 per cent according to then-current Australian regulatory rules.
Industrial and Commercial Bank of China Sydney Branch (ICBC Sydney) (A/A1/A) priced its second-ever deal into the Australian domestic market on February 5, selling A$650 million (US675 million) of new three-year floating rate notes (FRNs). ICBC Sydney's previous Australian market deal came in July 2011, when it sold A$400 million (US$416.7 million) of three-year paper at 105 basis points over bank bills.
Analyst readings of an on-hold Reserve Bank of Australia (RBA) cash rate decision in February offer somewhat divergent conclusions, though the stable 3 per cent rate itself came as little surprise. While research notes published in the immediate wake of the February 4 decision interpret the RBA's tone as dovish, some economists appear to believe the latest decision heralds a somewhat reduced chance of imminent further easing.
World Bank priced the fifth Kauri transaction of 2013 on February 5, selling NZ$500 million (US$421.2 million) in the market's largest-ever single-tranche pricing event. The deal will added to the NZ$1.275 billion of Kauri bonds priced in the first few weeks of the new year, which is itself already a record for international borrower issuance into the New Zealand market by the first week of February.
A receptive market and helpful pricing economics helped the Kauri market break a clutch of records at the start of 2013, including the largest aggregate volume printed at the beginning of the new year and the largest-ever deal from a supranational, sovereign and agency (SSA) issuer.
The week of the Australia Day holiday saw the primary market in Australia slow to a virtual halt although National Australia Bank priced a large tap on February 1. Westpac Banking Corporation launched a new retail hybrid deal, while Suncorp Bank joined the trend for cleaning up domestic government-guaranteed debt with a buyback offer. Kauri issuance continued to be the only activity in the New Zealand market.
Export Development Canada (EDC) (AAA/Aaa) priced a new five-year Kauri transaction on February 1, in the market's third new deal of the year. The transaction adds to EDC's single outstanding Kauri line, a 2017 maturity which it issued in March last year and tapped once – in September – to total NZ$350 million (US$294.7 million).
Issuance from offshore borrowers continues to drive primary market activity on both sides of the Tasman Sea. Two more issuers made their new year Kangaroo debuts in the past week, while Nordic Investment Bank returned to the New Zealand market to complete the largest-ever high-grade Kauri transaction. In Australia's domestic market the most notable action was the completion of Commonwealth Bank of Australia's government-guaranteed buyback.
The first month of 2013 has now seen two US banks return to the Kangaroo market for the first time since the financial crisis, as Citigroup (Citi) (A-/Baa2/A) priced a new Australian dollar issue on January 24. On January 17, Wells Fargo returned to the Kangaroo market to price a combined A$900 million (US$947.3 million) in a fixed- and floating-rate five-year transaction.
African Development Bank (AfDB) (AAA/Aaa) became the latest issuer from the supranational, sovereign and agency (SSA) sector to price a Kangaroo transaction in 2013 on January 24, as it added a new five-year point to its Australian dollar curve. So far this year A$4.925 billion (US$5.18 billion) of Kangaroos has priced, A$4.025 billion of it from SSA names.