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The April 2 decision by the Reserve Bank of Australia (RBA) to leave the Australian cash rate unchanged, at 3 per cent, came as little surprise to local analysts. However, while post-decision commentary generally interprets the reserve bank's accompanying statement as little changed from the previous month, there is a gradually-growing suspicion that further rate cuts may now be less likely than had previously been expected.
The approaching Easter holiday weekend saw deal flow slow almost to a halt in Australia and New Zealand. Just a single public market issue priced in the week, although the deal in question – New South Wales Treasury Corporation's issue of A$2.5 billion (US$2.6 billion) of three-year floating rate notes – was both large and unusual in format.
The market for corporate issuance in the Australian domestic market was solid if unspectacular in the first quarter of 2013, although following three new deals from mid-March intermediaries are optimistic about a steady pickup in supply.
On March 27 the New Zealand Debt Management Office (NZDMO) announced the four banks it has appointed to lead its first-ever syndicated nominal bond issue. ANZ, BNZ, Deutsche Bank and Westpac Institutional Bank will take top-line position on the issue of a new 2020 bond, which the government debt agency expects to conduct in April.
Bank deals in New Zealand's domestic market have seen a slow first quarter of the year but the recent start-up of activity has highlighted improved demand from retail investors for the coupon levels banks are willing to pay. According to the manager of the recent self-led deal from Bank of New Zealand (BNZ), the first bank deal to price in New Zealand this year, retail demand played a substantial role in the book.
Kiwibank issued its first-ever covered bond on March 25, selling CHF150 million (US$158.1 million) in a December 2020 maturity deal that is also the bank's first public, unguaranteed issue into a foreign currency market. The new deal was widely distributed to a wide range of investors, and Kiwibank says it hopes to return to the Swiss franc market periodically.
New South Wales Treasury Corporation (TCorp) (AAA/Aaa) priced A$2.5 billion (US$2.6 billion) in a new three-year maturity floating rate note (FRN) on March 26. The transaction is the second benchmark-sized FRN issue by an Australian semi-government this year following a A$2 billion placement by the South Australian Government Financing Authority (SAFA) in February.
A new residential mortgage-backed securities (RMBS) issue from ING Bank Australia (ING Bank), which priced on March 22, was doubled in size to A$1 billion (US$1.04 billion) from indicative volume. The deal increased the quantity of Australian dollar RMBS already priced in 2013 to nearly A$8 billion
Deal flow slowed significantly in the penultimate week of the first quarter, and the two Australian corporate deals that closed both came before the market turned its eyes to the emerging situation in Cyprus. Elsewhere Kiwibank took another step towards becoming New Zealand's first non-big four bank covered bond issuer.
Expected ratings have been assigned to a residential mortgage-backed securities (RMBS) issue by AFG Securities, a non-bank wholesale mortgage business owned by Australian Finance Group (AFG). The deal has indicative volume of A$275 million (US$285.2 million) across four tranches, and will become Australia's fourth non-bank RMBS issue of 2013.
On March 21, ANZ Wealth Australia (ANZ Wealth) (A+) launched and priced a new three-year deal in the Australian market, the issuer's first domestic transaction since June 2012. ANZ Wealth debuted in the market on June 14 2012 with a double-tranche issue of three-year fixed and floating rate notes that drew mainly domestic investors. Approximately 75 per cent of the deal was invested locally, with domestic asset managers as the biggest buyer.