News

On April 6, Commonwealth Bank of Australia (CommBank) issued a A$3 billion (US$3.1 billion) residential mortgage-backed securities (RMBS) transaction, which was upsized from a launch volume of A$1 billion. It is the second RMBS to come from a domestic major bank this year and CommBank's first since 2007, although it did issue through its Bankwest subsidiary in November 2010.

Société Générale (A+/Aa2/A+) completed a A$400 million (US$413.4 million) increase to its existing October 2014 floating rate note (FRN) Kangaroo bond on March 31. The tap – which was upsized from a launch volume of A$200 million – adds to an FRN tranche which now has A$650 million outstanding and sits alongside the A$250 million fixed rate piece of the same line.

The New Zealand Debt Management Office (NZDMO) has announced two increases to its domestic borrowing programme for the current financial year, adding NZ$1.5 billion (US$1.2 billion) on March 30 and again on April 12. The target maximum to be raised now at NZ$16.5 billion having previously had NZ$1 billion added in December last year.

Standard & Poor's (S&P) has no intention of revising the AAA rating on the state of New South Wales (NSW) it reaffirmed on March 28, despite claims a day later by the incoming government of a A$4.5 billion (US$4.6 billion) "black hole" in state finances. The rating agency says most of the purported state financial weakening comprises either expected falls in revenue it was already aware of or projections beyond the forward estimates period that may never be realised.

SP AusNet's (A-/A1) funding vehicle, SPI Electricity & Gas Australia Holdings, priced its second domestic bond transaction in just over a year on March 29. The A$250 million (US$255.8 million) placed in the transaction brings the volume already priced by Australian true corporate issuers in the first quarter to A$2.45 billion – a figure that is tracking well ahead of the A$6.9 billion placed in full year 2010.

Diversity returned to the Australian market in the past week following a period of low issuance, with the two market staples of recent times – big four bank and supranational, sovereign and agency (SSA) Kangaroo issuers – virtually silent. Primary volume has instead been driven by true corporates, a large deal from a local branch of an international bank, and the sub debt and residential mortgage-backed securities (RMBS) markets.

The draft of the legislation that will introduce a domestic covered bond regime to Australia caps individual banks' issuance at 8 per cent of an institution's Australian assets. The bill, which was published on March 24, also includes language specifically referring to the creation of debt instruments secured by covered bonds issued by multiple banks – a route to aggregate covered bond issuance by smaller issuers.

Following a month-long market hiatus, KfW Bankengruppe (KfW) priced the first new Kangaroo transaction from a borrower in the supranational, sovereign and agency (SSA) sector for over a month on March 24. The deal increased KfW's August 2020 line by A$250 million (US$253.3 million), bringing the total size of the bond to A$2.2 billion.

Brisbane Airport Corporation (Brisbane Airport) (BBB/Baa2) priced its first domestic issue in almost five years on March 23. The July 2019 maturity has a volume of A$200 million (US$201.8 million) and a margin of 220 basis points over swap, with pricing coming on the same day as launch. The deal follows an investor update conducted in late February across Sydney, Melbourne and Brisbane.

Lloyds TSB Bank Australia Branch (Lloyds TSB Australia) (A+/Aa3/AA-) priced a new 3.5-year senior unsecured domestic deal on March 24 in what was the issuer's second domestic transaction in its current incarnation. The deal launched a day earlier and one day after the bank's parent company launched what is believed to be the first ever Kangaroo residential mortgage-backed securities deal.

Lloyds Banking Group (Lloyds) has included an Australian dollar tranche in its latest securitisation, in what is believed to be the first ever Kangaroo residential mortgage-backed securities (RMBS) deal. The transaction, Headingley RMBS 2011-1, is headlined by Australian dollar- and euro-denominated class A1 tranches with the balance made up of a further six sterling pieces.

On March 22, ETSA Utilities Finance launched and priced a new A$250 million (US$251.3 million) 5.5-year senior unsecured transaction in the Australian market, upsized from a launch size of A$200 million. The deal priced at 135 basis points over swap - 5 basis points tighter than the indicative margin. The deal comes two weeks after ETSA Utilities Finance completed an investor update in Melbourne and Sydney.