News

In its market debut, University of Technology, Sydney (UTS) reaped the benefits of tightening spreads and a positive market tone to print the largest and tightest domestic transaction by an Australian university, deal sources say. They also attribute the deal’s success to a growing familiarity with the university funding model.

Issuer and lead sources on Bank of Queensland (BOQ)’s debut conditional pass through (CPT) covered bond say the deal paves the way for more Australian-origin issuance for the broadly European asset class. The deal helped BOQ achieve a key target in its funding strategy as well as provided a welcome level of ratings stability in an uncertain backdrop.

In the wake of Adelaide Airport’s first domestic transaction in seven years, deal sources attribute robust demand to a desire for infrastructure assets as well as the ongoing hunt for credit product. Flexibility on the part of the issuer and investors was also key.

Commonwealth Bank of Australia (CommBank) took advantage of tight credit spreads and long-dated demand to print its longest-ever benchmark transaction on 6 July. The bank printed US$1.5 billion of 30-year bonds, tripling the duration of its previous longest-dated senior-unsecured deal and adding more than four months to its weighted-average portfolio duration at the same time.

The latest total loss-absorbing capacity (TLAC)-compliant deal denominated in Australian dollars to come to market attracted incrementally more domestic demand than its closest comparison transaction, leads say. When – and even whether – this type of issuance will migrate to Kangaroo documentation remains an open question, however.

Australia’s latest issuer into the US dollar Reg S market, SGSP Australia Assets (SGSP), says the Asian parentage that previously opened the door to this regional market is likely no longer a prerequisite. The scale and quality of the Reg S bid means SGSP now includes this issuance option among its three core debt capital markets.

The Australian residential mortgage-backed securities (RMBS) market continued its renaissance in the penultimate week of June with two new deals issuing. Auswide Bank printed ABA Trust 2017-1 for A$300 million (US$231.2 million) on 23 June, a day after Columbus Capital (Columbus) netted A$500 million from Triton 2017-1.

Brisbane Airport Corporation (Brisbane Airport) has made an emphatic return to the US private placement (USPP) market. The airport reached the financial close of its fifth USPP offering on 15 June having attracted a near eight-times oversubscription to a US$338 million equivalent transaction, at what it says was highly competitive pricing.

Wayne Byres, chairman of the Australian Prudential Regulation Authority (APRA), expressed in a 28 June speech his view that the final stages of Basel III planning and implementation “will largely mark the end of the cycle” for bank regulation. However, he also suggested that he does not want to see the regulatory work of the past decade unwound to serve any country’s domestic considerations.

The issuer and arranger of an innovative mezzanine warehouse-funding transaction say the deal demonstrates the burgeoning scale of demand for higher-yielding securitisation notes. The A$40 million (US$30.2 million), class B tranche of zipMoney’s first securitisation warehouse facility was placed with more than 400 accounts according to the transaction’s arranger, FIIG Securities (FIIG).

New South Wales Treasury Corporation (TCorp) joined its counterpart in Victoria in announcing a return to net new bond issuance for the coming year as the state exits its phase of asset transactions and consequent low or negative funding needs. On 21 June, TCorp disclosed an expected issuance task of A$6.4 billion (US$4.9 billion) for 2017/18 and further growth in the following years.

Moody’s Investors Service (Moody’s) lowered its macro profile for Australia on 19 June, a move that triggered a one-notch downgrade of 12 local banks including the four majors. The downgrade takes the Australian majors to Aa3 – a rating level equivalent to that afforded the big four by the other two largest rating agencies – and drops their New Zealand subsidiaries outside the double-A band, to A1.