News

Australia’s major banks are set to pay more for their wholesale funding – both short and long term – under a major-bank levy introduced by the 2017/18 Commonwealth budget. The government estimates the levy, which amounts to 6 basis points on all major-bank liabilities excluding additional tier-one instruments and most deposits, will raise A$6.2 billion (US$4.5 billion) over four years.

Kiwibank’s decision to pull a planned Kangaroo transaction between pricing and settlement was driven by a preliminary Reserve Bank of New Zealand (RBNZ) view that the issuer’s outstanding tier-one and tier-two securities may not comply with the local capital-adequacy regime.

The H1 2017 edition of the Fitch Ratings (Fitch)-KangaNews Fixed-Income Investor Survey has a domestic risk factor with a clear lead at the top of the agenda for Australian fund managers. The domestic buy side is increasingly concerned about the housing market, though it remains fairly confident about credit quality and spread direction.

Treasury Corporation of Victoria (TCV) has disclosed an expected funding task of A$8.3 billion (US$6.3 billion) for 2017/18, significantly up on recent years as the state government continues to focus on infrastructure investment even after the asset-sales cycle has largely played out. Analyst response to the Victoria state budget, delivered on 2 May, is broadly positive despite the increased deficit though TCV spreads widened on budget day.

Vicinity Centres (Vicinity) says all-in cost on its debut domestic transaction was very attractive even though some domestic investors reveal they sat the deal out based on sector preference and spread widening. Despite a slightly softer market backdrop, buy-side sources say they expect solid demand for corporate credit to continue.

Goldman Sachs (BBB+/A3/A) launched a seven-year deal in the Australian market on 20 April. Unlike other recent US bank issuance in Australia – including the A$1.2 billion (US$899.4 million) print by Wells Fargo & Company on 19 April – Goldman Sachs is issuing off its Kangaroo programme rather than issuing a global transaction.

Having issued two benchmark transactions in less than a month, including a debut in the Kangaroo market, Auckland International Airport (Auckland Airport) says a larger capex task will make the issuer a more frequent visitor to global markets. It highlights the extremely favourable pricing outcome it received in both Australian and New Zealand dollars and the positive tenor evolution of the Australian option.

A rare fully institutionally targeted unrated transaction in the Australian market demonstrates the increasing willingness of fund managers to engage with transactions without a formal rating, deal sources say. But further flow will likely be constrained by the issuer’s unusual status as an unrated entity with investment-grade metrics.

Lead managers on Telstra Corporation (Telstra)’s A$1 billion (US$752 million) multi-tranche domestic deal tell KangaNews that following a succession of smaller steps the domestic market has taken a giant leap forward with this latest transaction. According to KangaNews data, the deal is Telstra’s largest-ever domestic transaction and it contains the biggest 10-year non-credit-wrapped tranche issued by a nonfinancial corporate into Australia.

On 23 March Sumitomo Mitsui Financial Group (SMFG) printed A$1 billion (US$764.6 million) of five-year notes in a SEC-registered total loss absorbing capacity (TLAC)-compliant benchmark issue. The transaction is the first Australian dollar Asian-origin TLAC-eligible deal and SMFG is the first-ever non-US-domiciled issuer to print a deal in Australian dollars in SEC format.

Appealing pricing and extensive predeal marketing enabled Latitude Finance Australia (Latitude) to attract a multiple-times oversubscription to all tranches of its debut credit-card asset-backed securities (ABS) issue, according to deal sources. This was despite the combination of a new name, new collateral type and a new deal structure for the Australian market.

In the wake of Australia’s first domestic true-corporate green-bond deal, the transaction’s arranger says internal and external drivers point to growing momentum in the asset class. Investa Office Fund (IOF) was well positioned to be the first domestic mover, but it is far from unique as a potential issuer – especially in the property sector.