News

The completion of an exchange offer for subordinated debt issued by Royal Bank of Scotland (RBS) (A-/A3/A), but which the bank is prohibited from calling, has seen just under A$1.1 billion (US$1.2 billion) of domestic paper replaced with new RBS sub debt. The total outstanding in the four locally-issued tranches subject to the exchange offer in advance of its March 9 completion was A$1.9 billion.

AGL Energy (AGL) (BBB) set the margin on its retail hybrid offer on March 7, finalising offer volume at A$650 million (US$686.7 million) in a security with a seven-year term to redemption date. The issuer widened the offer margin from an indicative 340-360 basis points over bank bill swap rate (BBSW) to 380 basis points over BBSW.

Although the new benchmark A$1 billion (US$1.1 billion) deal priced on February 28 by New South Wales Treasury Corporation (TCorp) (AAA/Aaa) has a very close maturity date to an existing Commonwealth-guaranteed line issued by the state treasury corporation, TCorp says the new issue was not primarily aimed at reducing its outstanding Commonwealth-guaranteed volume.

World Bank marked its return to the Kangaroo market after a year-long absence with a higher proportion of domestic demand in the shorter-dated of the two tranches than has generally been the case in Kangaroos in 2012. The issuer says it was pleased to achieve the volume of demand – A$1.05 billion (US$1.1 billion) in total – the transaction attracted, which enabled an upsize of A$450 million across both tranches.

Australian deal flow has remained subdued although issuance came from a number of sectors, including a syndicated Commonwealth government inflation-linked issue and the return of an Asian bank to the domestic market via its Sydney branch. In ratings actions, Fitch Ratings downgraded three of the Australian majors to equalise all the big four ratings at AA- stable.

Overseas Chinese Banking Corporation Sydney Branch (OCBC Sydney) (AA-/Aa1/A+) priced its second Australian market transaction on February 23. The deal follows a domestic debut from July last year, in which OCBC Sydney priced A$500 million (US$532.3 million) of three-year floating rate notes at a margin of 83 basis points over bank bill swap rate.

Network Rail (AAA/Aaa/AAA) is roadshowing in Australia in the week ending February 24 with the UK rail infrastructure agency emphasising its strong sovereign links as it aims to revive a Kangaroo programme that has lain dormant since 2006. The firm's treasury team hopes to be afforded pricing befitting a top-tier non-Eurozone agency borrower should Kangaroo issuance opportunities emerge.

Following the pricing of its first Kangaroo transaction of 2012 on February 23, the European Investment Bank (EIB) (AAA/Aaa/AAA) tells KangaNews that improved pricing margins enabled it to return to a market it had not tapped since June last year. Conditions remain difficult in the supranational, sovereign and agency (SSA) Kangaroo market, however, with a relatively narrow buyer base and derivatives challenges chief among the lingering issues.

The first iteration of Bank of America Merrill Lynch (BAML)'s CFO Outlook Asia survey shows the outlook of Australian respondents, in terms of both the economic picture and financing expectations, to be among the most positive in the region. The survey, which was published on February 21, captures the views of 465 CFO-level respondents across seven Asia Pacific countries including around 50 Australian executives.

On February 20 ANZ National Bank (ANZ National) (AA-/Aa3) confirmed it is calling for indications of interest in a new seven-year senior deal in the domestic market. The bank had already announced its plans for early redemption of NZ$250 million (US$210.2 million) of subordinated bonds that were issued in February 2007, on their March 2 call date.

The Australian Office of Financial Management (AOFM) completed the bookbuild of a new inflation-linked bond line on February 21 having added A$150 million (US$160.7 million) to the deal's launch volume of A$750 million. The transaction is the AOFM's second syndicated inflation-linked issue since it returned to the market in September 2009; it launched its 2030 linker a year later.

Deal flow in Australia focused on the retail market in the week ending February 17, and although four subordinated or hybrid transactions launched the long gestation period of these issues means completed primary market activity was limited to a single Kangaroo. Meanwhile, New Zealand saw its first public domestic issue of 2012.