News

The issuers of two new residential mortgage-backed securities (RMBS) deals highlight engagement by investors – including offshore accounts – all the way down the capital structure as instrumental to volume outcomes. The distribution profile of both transactions demonstrates the extent to which the net is being cast wider.

Issuer and investors say pricing on Deutsche Bahn’s debut Kangaroo deal worked for both sides. However, final book size may have been somewhat tempered by the fact that Deutsche Bahn falls into a mandate gap for some of Australia’s largest institutional accounts.

A perfect alignment of market conditions drove World Bank to use a unique approach to access Kangaroo and Kauri markets simultaneously in its latest transaction. The volume outcome demonstrates the value of World Bank’s strategy – most importantly its willingness to respond to demand conditions.

In August, Contact Energy (Contact) finalised a NZ$1.8 billion (US$1.3 billion) green borrowing programme – the first such certification completed by a New Zealand issuer and also the largest-ever single green certification by the Climate Bonds Initiative (CBI). KangaNews spoke to Louise Tong, Contact’s Wellington-based head of capital markets and tax, about the thinking behind the initiative, the process and debt-issuance plans.

Latitude Finance Australia (Latitude) capped the size of its second-ever public securitisation deal and ran a limited marketing process to reward investors that have consistently provided reverse enquiry since the issuer’s March debut. Latitude says further investor diversity remains part of its funding strategy and this goal will likely be to the fore in its next deal – which may be backed by different collateral.

The 2017/18 Australian Commonwealth budget enabled the Australian Office of Financial Management (AOFM) to project a reduced year-ahead funding requirement for the first time since the financial crisis. Although market participants have no expectation of significant surpluses ahead, they are thinking about how lower government bond issuance might affect market dynamics – with eyes turning first to the sluggish 20-year futures contract.

Australia’s big-four banks have attacked the levy on their liabilities proposed by the recent federal budget, describing the levy as a rushed, ill thought out, inadequately consulted piece of “bad policy”. All four majors published submissions made to Treasury on 15 May, in which they set out a raft of complaints and proposed changes to the levy.

In the wake of the Australian market’s second billion-dollar deal from a global corporate issuer in less than three weeks, deal sources insist the outcome underscores the local market’s evolution on the global stage. This means truly global brands are becoming increasingly comfortable with their ability to execute meaningful transactions with minimal execution risk in the local market.

In a New Zealand government bond (NZGB) programme update released on 23 August, the New Zealand Debt Management Office (NZDMO) revealed that its 2017/18 programme will remain unchanged in light of the pre-election economic and fiscal update 2017.

Ausgrid made its US private-placement (USPP) market debut in early August, with a US$1.885 billion-equivalent transaction comprising 10-, 12- and 15-year tranches. Sources say the deal’s record-breaking outcome demonstrates the extent to which USPP remains a viable funding option for Australian corporates in long maturities – even if it has been cannibalised by the domestic market out to 10 years.

Pepper Australia (Pepper) printed a A$500 million (US$393.1 million) debut deal off a new residential mortgage-backed securities (RMBS) programme on 11 August. The Pepper I-Prime programme is more heavily weighted towards investment loans and has been developed in response to evolving investor appetite, the issuer says.

The cost of funding in Australian dollars is well inside other options at present, including US private placement (USPP). So says Victoria Power Networks (VPN)’s treasurer in the wake of its first domestic transaction in three-and-a-half years. A trio of factors enabled VPN to achieve record-breaking pricing.