News

Australia’s securitisation market continues to generate well bid and competitively priced transactions, with AMP Bank printing the market’s latest upsized and oversubscribed deal. The issuer highlights robust international demand throughout the capital structure as well as the pricing benefit achieved from the deal’s capital-relief structure.

For the first time in the current cycle, the New Zealand Debt Management Office (NZDMO) includes a government commitment to maintaining a minimum supply of New Zealand Government bonds (NZGBs) on issue in its latest funding update. The update, which was released on 25 May following the New Zealand budget, says the government intends to maintain minimum NZGB supply of “not less than 20 percent of GDP over time”.

Commonwealth Bank of Australia (CommBank) revealed on 25 May that it is engaging with investors on a potential self-led residential mortgage-backed securities (RMBS) transaction from its Medallion programme. A forthcoming deal will be for funding and capital-relief purposes.

Mid-curve Kangaroo market pricing has swung back into a range that some global supranational, sovereign and agency (SSA) borrowers consider to be an acceptable premium for diversification purposes, market participants say. A recent-year issuance decline shows signs of having bottomed out – though it is yet to rebound – and market users say demand for the SSA product is steadily broadening.

The Australian market moved a step closer to a formalised best practice for deal disclosure on 15 May when the Australian Financial Markets Association (AFMA)’s credit product committee released a market notice recommending guidelines to be followed by market participants. Dealers tell KangaNews market practice has substantially coalesced around the guidelines though with no enforcement power it remains to be seen whether they will be followed universally.

Institutional investors’ growing willingness to engage with unrated and other forms of higher-yielding debt supported the substantially larger volume outcome achieved by Australia’s latest returning unrated issuer, the deal’s arranger says. NEXTDC priced A$300 million (US$222.5 million) of four-year bonds on 15 May from a significantly oversubscribed book according to deal sources.

S&P Global Ratings (S&P) affirmed its triple-A rating on the Australian sovereign – with negative outlook – on 17 May. S&P’s update reflects the consensus view of analysts that the 2017/18 Australian budget largely offers fiscal continuity rather than significant consolidation or deterioration.

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.

The 11 May completion of the long-term lease of Endeavour Energy (Endeavour), the New South Wales (NSW) electricity distributor, has caused NSW Treasury Corporation (TCorp) to reduce its expected term-funding task for the current year to a A$200 million (US$146.8 million) net repayment of debt from the A$4 billion of net issuance previously forecast.

Bank of Queensland (BOQ) (A3/A-) revealed on 11 May that it has established a Reg S covered-bond programme with conditional pass-through (CPT) features. BOQ is the first Australian bank to introduce such a programme, which allows issuers at lower rating levels more efficient access to triple-A-rated covered-bond issuance.

If socially responsible fixed-income asset classes, and in particular green bonds, become a consistent component of the Australian debt market it seems likely that March-April 2017 will be looked back on as a landmark period. Issuance volume hit an all-time high, including a clutch of breakthrough and innovative transactions.

The Australian Office of Financial Management (AOFM) confirmed an expected gross Treasury bond issuance task of A$80 billion (US$58.8 billion) for 2017/18 following delivery of the Australian federal budget on May 9. The gross figure includes A$34 billion of net new issuance, while a December 2016 update forecast gross and net issuance totals of A$100 billion and A$74 billion for 2016/17.