News

Wesfarmers (A-/A3) priced a new domestic bond transaction on March 1, selling its A$350 million (US$358.1 million) new seven-year issue at an indicative margin of 115 basis points over semi-quarterly swap. The issuer says it approached the market with a limited volume deal and attracted a strong book predominantly comprising Australian domestic investors.

Japanese fund managers have confirmed analysis from the Australian market identifying selling of Australian dollar securities by investors in a number of sectors in Japan. The scale of divestment has been significant and appears likely to continue for the near term, but the latest information from analysts and Japanese investors suggests core AUD positions will be maintained.

ANZ Banking Group (ANZ) says its decision not to redeem a subordinated note issued out of its New Zealand subsidiary at the first of its two call dates is no more than a function of the specific security's unique features, and has no impact on the rest of the bank's capital instruments. On February 15 ANZ told investors it would not immediately be redeeming the NZ$835 million (US$710.3 million) subordinated bond it issued in April 2008.

Westpac Banking Corporation (Westpac) completed the bookbuild on Australia's first new retail debt offer of the year on February 6, having upsized the Basel III-compliant, tier one hybrid transaction from an initial A$500 million (US$514.5 million) to A$1.25 billion. The bank had said an issue of the smaller target volume would add approximately 16 basis points to its tier one capital, which at the end of its 2011/12 financial year stood at 10.3 per cent according to then-current Australian regulatory rules.

Analyst readings of an on-hold Reserve Bank of Australia (RBA) cash rate decision in February offer somewhat divergent conclusions, though the stable 3 per cent rate itself came as little surprise. While research notes published in the immediate wake of the February 4 decision interpret the RBA's tone as dovish, some economists appear to believe the latest decision heralds a somewhat reduced chance of imminent further easing.

A receptive market and helpful pricing economics helped the Kauri market break a clutch of records at the start of 2013, including the largest aggregate volume printed at the beginning of the new year and the largest-ever deal from a supranational, sovereign and agency (SSA) issuer.

Conducive pricing, a positive market tone and a desire for diversity in Australian dollar investments are likely to prompt more international financial institutions (FIs) to follow Wells Fargo into the Australian market in the near future, the US bank's lead managers say. Wells Fargo priced A$900 million (US$949.2 million) in a new five-year Kangaroo issue on January 17, at a margin only just wider than domestic major bank issuance.

Positive sentiment in global markets enabled an early-year flurry of Kangaroo issuance, which saw A$2.225 billion (US$2.35 billion) price in six deals in the first full week of the year. Diverse demand pools are likely to facilitate issuance of both mid- and long-tenor deals, from a greater range of issuers. However, with rare exceptions Australian investors continue to play no more than a complementary role in supranational, sovereign and agency (SSA) Kangaroos.

The Australian Commonwealth government released an exposure draft of amendments to the Corporations Act on January 11, designed to streamline the offering process for "simple" corporate bonds. As expected the draft proposes a two-part prospectus regime and changes to personal liability rules for company directors, while leaving much of the detail of the prospectus setup to regulators.

KangaNews's final intermediary league tables for 2012 illustrate another good year for ANZ as a lead manager, as the bank led the pack for both Australian and New Zealand dollar bond issuance. Sectoral league tables – which, for the first time, include covered bond and retail-accessible issuance tables – feature market leadership from banks including ANZ, National Australia Bank (NAB), TD Securities (TD) and UBS Investment Bank (UBS).

KangaNews is proud to announce the launch of its latest set of intermediary league tables: the AUD Listed Debt League Tables. Early in what turned out to be a busy year for retail-accessible issuance in Australia, market participants asked KangaNews to expand its existing suite of league tables to recognise the work of intermediaries in bringing such transactions to market. The AUD Listed Debt League Tables are the product of KangaNews's work in this area.

What could be the last 'old-style' lower tier two (LT2) subordinated debt transactions in the Australian market both attracted strong demand, as issuers and investors hurried to participate in transactions before the dawn of a new regulatory regime at the start of 2013. Market sources admit new subordinated securities, featuring explicit loss-absorbency and more equity-like features, are likely to be a harder sell in the institutional market.