News

Deal flow ramped up across a diversity of sectors in both the Australian and New Zealand markets this week, as a range of issuers took advantage of continually improving market conditions. With some of those sectors only now opening up, most market participants expect the flood of issuance to continue as the end of the financial year approaches.

Fitch Ratings (Fitch) shook the securitisation market on May 17 when it released a proposal to change the criteria for lenders' mortgage insurance (LMI) in residential mortgage-backed securities (RMBS) transactions. While the rating agency tells KangaNews LMI will still have a firm place in RMBS structures, issuers acknowledge an openness to alternate configurations going forward.

Following the release of New Zealand's federal budget, the New Zealand Debt Management Office (NZDMO) announced on May 19 a significantly reduced domestic debt programme for 2011/12. In the next financial year, the NZDMO intends to issue up to NZ$13.5 billion (US$10.7 billion) – down from NZ$20 billion in 2010/11.

The ratings review of Australia's big four banks initiated by Moody's Investors Service (Moody's) in February has concluded with the banks being downgraded to Aa2. The lowered rating had been widely expected by market participants as it largely brings the domestic majors into line with their levels assigned by the other mainstream agencies; Moody's has also now given the big four a stable ratings outlook.

On May 25 National Australia Bank (NAB) issued a new A$1 billion (US$1.1 billion) residential mortgage-backed securities (RMBS) deal, based on mortgages originated by the bank's Advantedge Financial Services (Advantedge) subsidiary. The deal was upsized from a launch volume of A$750 million.

International Finance Corporation (IFC) (AAA/Aaa) issued a new NZ$150 million (US$118.4 million) five-year Kauri line on May 19. The issue is just the second transaction to price in the Kauri market this year, and it takes IFC's outstanding Kauri paper to NZ$1.1 billion.

Sydney Airport Finance Company (Sydney Airport) (BBB/Baa2/BBB) announced its second domestic bond deal in a year on May 18, with the company pricing a new A$100 million (US$106.7 million) 2018 transaction two days later. The company completed its first domestic deal since 2006 – and its debut non-credit wrapped transaction – in June last year with the placement of a A$175 million 2015 line.

Telstra Corporation (Telstra) (A/A2) increased its domestic July 2020 bond line by A$150 million (US$160 million) on May 18. The tap was upsized from a launch volume of A$100 million and is the second time the line in question has been increased since it was inaugurated in a A$150 million transaction in June last year; it also had A$200 million added in November.

The latest Kangaroo deal to be issued by KfW Bankengruppe (KfW) (AAA/Aaa/AAA) has seen the German agency move within striking distance of European Investment Bank (EIB) (AAA/Aaa/AAA) as the largest Kangaroo borrower by both total issuance and outstanding volume. On May 19, KfW increase its January 2016 Kangaroo by A$500 million (US$533.4 million).

AMP Bank has completed a new A$940 million (US$996.8 million) residential mortgage-backed securities (RMBS) deal, which was upsized from a launch volume of A$500 million. The deal is the second RMBS of the month, following hot on the heels of a A$400 million issue from Resimac on May 13.

BNP Paribas Australia Branch (BNP Paribas Australia) (AA/Aa2/AA-) priced its second domestic deal of the year on May 16, issuing A$1 billion (US$1.06 billion) in a new May 2016 line. The issuer has been a consistent presence in the Australian market since its 2009 debut, placing A$1 billion that year followed by A$2.45 billion last year and A$800 million so far in 2011.

The second financial institution (FI) Kangaroo to launch in a week was announced on May 16, with Morgan Stanley (A/A2) placing a new A$500 million (US$530 million) four-year transaction one day later. The deal, which is Morgan Stanley's first Kangaroo since February 2007, follows the pricing of A$1.25 billion of November 2016 paper by Goldman Sachs on May 9.