News
The reorganisation of Commonwealth Bank of Australia (CommBank)'s debt operations appears to be ongoing, with the bank refusing to disclose full details of the changes before internal discussions have been completed. The key feature of the reorganisation for CommBank's debt business is the alignment of DCM origination with other debt origination as part of the bank's corporate finance business, thus separating origination from DCM syndication and sales – which join fixed income trading under the markets banner.
Discussion on the second day of the Australian Securitisation Forum (ASF)'s annual conference focused on the investor universe on- and offshore in an environment of seemingly never-ending market dysfunction. Borrowers say flexibility of funding options, in a world where disparate investor bases are offering unpredictable price points and unreliable execution capacity, will be key.
Lower-than-expected volume of covered bond issuance by the major Australian banks last week has caused the AUD/USD basis swap to narrow by at least 14 basis points in the past few days and consequently worsened Kangaroo issuance economics. However, intermediaries say the larger problem is seemingly relentless extreme spread widening – which has taken issuance off the table for Kangaroo borrowers for the foreseeable future and may change the characteristics of the market entirely going forward.
Suncorp-Metway (Suncorp) priced a new A$1.25 billion (US$1.2 billion) prime residential mortgage-backed securities (RMBS) deal on November 23. The transaction was upsized from a launch volume of A$750 million and is Suncorp's first RMBS since it issued a A$1 billion deal in May 2010.
A trio of supervisory heavyweights headlined the first day of the Australian Securitisation Forum (ASF)'s annual conference on November 21 – but the content of the day's discussions was as much about the future makeup of bank funding and the Australian sector's global investor base as the details of regulation. Overall, regulators believe there should be a role for securitisation in future, but only as part of a multi-faceted funding mix that now also includes covered bonds.
Insurance Australia Group (IAG) set the final rate on its subordinated bond in New Zealand on December 15. The offer opened on November 16 and was initially targeting a volume of NZ$250 million (US$188.7 million), but was upsized to NZ$325 million as a result of oversubscription during the bookbuild process. The minimum interest rate until the first call date, in December 2016, has been set at 7.5 per cent based on the offer's close on December 12.
Westpac Banking Corporation (Westpac) became the second Australian bank to complete a covered bond, printing a US$1 billion issue on November 17. Following ANZ Banking Group (ANZ)'s deal two days earlier, Westpac also chose the US market to make its debut thanks to the more appealing cost of funds sourced in US dollars.
ANZ has appointed a new global head of debt origination and head of capital markets Asia, with Michael Luk set to commence the role on November 23. In the Hong Kong-based position Luk will replace Reuben Tucker, who is returning to his native New Zealand having held the Hong Kong job for three yeas. He will continue to work for ANZ.
The week beginning November 14 saw two new domestic corporate deals come to market. While the major banks turned their attention offshore - with ANZ Banking Group and Westpac Banking Corporation both completing their debut covered bond issues - the asset-backed market also saw the launch of a new auto deal from Capital Finance Australia. In New Zealand Transpower also announced a forthcoming transaction.
On November 15 Transpower (AA-/A1) priced its NZ$200 million (US$150.2 million) offer of unsecured bonds, comprising a four-year floating-rate maturity and a seven-year fixed-rate note. The issue is Transpower's first public transaction in New Zealand since the first half of 2010, when it issued NZ$100 million in a 10-year inflation-linked deal.
Caltex Australia launched and priced a new seven-year A$150 million (US$149.8 million) domestic bond on November 18, which was upsized from a launch volume of A$100 million. The deal is the fourth domestic corporate transaction inside a month after a three month primary market hiatus, with the most recent issue completed by Volkswagen Financial Services Australia (A-/A3) on November 16.
ANZ Banking Group (ANZ) became the first Australian major bank to issue a covered bond on November 15, taking US$1.25 billion in the US market. The bank's Melbourne-based head of group funding, Luke Davidson, exclusively tells KangaNews that the bank expects to build up a number of offshore covered bond programmes in the wake of strong demand for the debut transaction.