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While a general risk-off sentiment around pricing date may have assisted New South Wales Treasury Corporation (TCorp) (AAA/Aaa) in the issue of its latest benchmark line, leads on the deal say the semi-government sector continues to be well supported throughout market conditions seen in 2012. However, global volatility and the quantity of Australian dollar issuance later in the first quarter suggest a slower primary market in the near term.

Provisional ratings have been assigned to a forthcoming residential mortgage-backed securities (RMBS) issue from ME Bank which includes a one-year bullet maturity tranche provisionally sized at US$300 million. The bullet tranche is supported by a redemption facility provided by National Australia Bank (NAB), under which NAB guarantees to underwrite any potential shortfall in the tranche's redemption fund at maturity date.

After a busy March took first quarter Australian dollar issuance volume to record levels, April opened with much more subdued deal flow in the Australian market and no public activity at all in New Zealand. The first week of the new quarter saw just three Australian deals price – two Kangaroos and a rare triple-B corporate transaction – for a total volume of A$800 million (US$824.9 million).

Nordic Investment Bank (NIB) (AAA/Aaa) returned to the Kangaroo market on April 4, for the first time since 2010, pricing a new 2022 Kangaroo deal. Its last issue priced in October 2010, and had a volume of A$325 million (US$338 million) to mature on April 6 2015. It priced at a margin of 75.25 basis points over government or 33 basis points over swap.

The margin on South Australian Government Financing Authority (SAFA)'s (AAA/Aaa) new August 2019 benchmark select line, which priced on April 4, was in line with analyst predictions at 31 basis points over semi-semi swap or 113 basis points over Commonwealth government securities. SAFA sold A$750 million (US$770.3 million) in the new line's tender – the upper end of a A$600-750 million volume range.

Kommunalbanken Norway (KBN) (AAA/Aaa) has priced a new five-year Kangaroo – its second issue in 2012 following a tap of its April 2021 bond on March 8. The previous deal had a volume of A$150 million (US$156.1 million) and was issued at a margin of 148.5 basis points over government or 80 basis points over swap.

The issuer of Australia's first residential mortgage-backed securities (RMBS) transaction of 2012 says the decision to bring the deal to market was backed by the expectation that the rapid phase of spread contraction seen between late January and the end of the first quarter has probably played out. Leads on the transaction are confident that cautious further deal flow will follow the market re-opening.

The pricing of the first three home-currency covered bonds by Australian major banks helped take first quarter issuance in the domestic credit market to an all-time record outside the era of government-guaranteed flow. While the combined covered bond volume of A$9.6 billion (US$10 billion) accounted for over 40 per cent of primary domestic market activity, overall issuance showed signs of diversity especially later in the quarter.

United Energy Distribution (UED) (BBB/Baa2) priced a new five-year transaction on April 3, in just the second Australian domestic issue from a triple-B rated corporate this year. The new issue closed at its indicative volume of A$200 million (US$205.5 million) and price of 220 basis points over swap .

Issuer and lead managers on Australia's latest retail hybrid transaction say its structure and size helped ensure a successful outcome despite the deal coming to market shortly after the pricing of A$4.35 billion (US$4.52 billion) of retail fixed income product in a two-week spell. Insurance Australia Group (IAG) (A+) set a margin of 400 basis points over bank bill swap rate (BBSW) on its A$350 million convertible preference share (CPS) offer on March 27.

What turned into a bumper issuance quarter, following a subdued start, concluded with one more week of diverse deal flow in the Australian market. For the first time in 2012, residential mortgage-backed securities issuance added to aggregate issuance for the week, which also included semi-government, Kangaroo, and domestic bank and corporate transactions.

Caterpillar Financial Australia (Caterpillar) (A/A2/A) priced its first domestic deal of 2012 on March 29, issuing a A$100 million (US$103.7 million) new three-year bond at a margin of 95 basis points over swap. Caterpillar has been a regular Australian market borrower in recent years, issuing two transactions in each of 2010 and 2011 for a total of A$200 million and A$220 million respectively.