News

Although NZ$1.25 billion (US$1.02 billion) of issuance from international borrowers in less than a week may have reduced the short-term prospects of further Kauri deal flow, issuer and leads on the recent World Bank Kauri transaction say demand for New Zealand dollars – especially in Asia – is growing. World Bank placed NZ$400 million on July 31 in the largest single Kauri issue since 2007.

Although the domestic bid – supported by interest from Asia – dominated the book in the return of Queensland Treasury Corporation (QTC) to the syndicated benchmark market, issuer and leads say the addition of a 144A capability to QTC's benchmark programme also attracted interest from US investors. The treasury corporation placed a new 2019 bond via a A$1.65 billion (US$1.7 billion) bookbuild on August 1.

Although Australian dollar deal flow slowed down in the first week of August, the return of Queensland Treasury Corporation to syndicated benchmark issuance on August 1 helped keep issuance volume healthy. International deal flow also returned to New Zealand's market as World Bank priced the largest Kauri transaction since 2007, and while the Australian securitisation market remained quiet no fewer than three deals received preliminary ratings.

FlexiGroup, which last issued in the asset-backed securities (ABS) market in June 2011, priced a new securitisation transaction with volume of A$255 million (US$267.1 million) on August 3. The transaction is a securitisation of nearly 120,000 consumer loan receivables, according to Fitch Ratings (Fitch), with home-related products like solar energy forming the largest contributing asset type at 50.6 per cent of the pool.

The second Australian residential mortgage-backed securities (RMBS) deal in three days priced on August 9, as FirstMac introduced its first transaction since December last year. The deal, FirstMac Mortgage Funding Trust Series 2012-1, has volume of A$300 million (US$316.6 million) spread across three rated and two unrated tranches.

Issuers and intermediaries involved in recent Kangaroo deals from Canadian borrowers say attractive Australian dollar pricing and investor demand for the perceived safe-haven status offered by Canadian credits could help clear the way for further flow. Late July saw a flurry of Kangaroo issuance that included a brace of Canadian-origin deals, including a debut, for a total of A$950 million (US$996.9 million).

Issuer and leads on the first, and to date only, German-origin Kangaroo deal to price following the decision of Moody's Investors Service (Moody's) to revise the outlook on its Aaa rating on the German sovereign to negative say demand for the transaction was unaffected. In fact, KfW Bankengruppe (KfW) says its new 2017 issue attracted strong Australian demand despite the potential threat to its local repo-eligibility.

Continuing demand for retail fixed income transactions in Australia allowed Caltex Australia (Caltex) to bring forward the bookbuild date for its subordinated notes offer to August 3 – from August 8 – and to nearly double the size of the offer at the tighter end of its indicative pricing range. Caltex allocated A$525 million (US$555.1 million) through its bookbuild, at a margin of 450 basis points over bank bills.

Pricing was completed on a new residential mortgage-backed securities (RMBS) transaction from Commonwealth Bank of Australia (CommBank), in the bank's first securitisation issue since it placed A$3 billion (US$3.2 billion) in April last year. The new transaction, called Medallion Trust Series 2012-1, was upsized by A$250 million to a total A$1 billion.

KfW Bankengruppe (KfW) (AAA/Aaa/AAA) has priced a new Kangaroo transaction on August 1. The new five-year notes add to KfW's A$21.85 billion (US$23 billion) outstanding over 12 lines. Leads on the deal are Deutsche Bank, TD Securities and UBS Investment Bank.

In its first syndicated deal of 2012, Queensland Treasury Corporation (QTC) (Aaa/AA+) has priced a benchmark transaction on August 1 with a volume of A$1.65 billion (US$1.73 billion). The deal, to mature on June 21 2019, is led by Deutsche Bank, National Australia Bank and UBS Investment Bank.

World Bank (AAA/Aaa) has priced its second transaction in the New Zealand market in 2012 with a five-year Kauri bond on July 31. Its last issue in February brought World Bank's outstanding volume to NZ$17.7 billion over three lines.