News

On February 7, Rentenbank (AAA/Aaa/AAA) increased its September 2014 Kauri line by NZ$50 million (US$38.5 million). The tap adds to a line which was introduced in September 2009 at a size of NZ$100 million – Rentenbank's most recent Kauri deal. The deal priced in line with guidance, at 54 basis points over semi-quarterly swap, or 35 basis points over the April 2015 New Zealand government bond.

Federal support for the repair of state-owned assets affected by the recent floods in Queensland have helped the state's treasury corporation reduce its expected borrowing requirement for the financial year 2010/11 to A$15 billion (US$15.2 billion). Queensland Treasury Corporation (QTC) announced the A$3 billion reduction in its annual funding task on February 2 following the state's mid-year budget update on January 28.

The most consistent post-crisis true corporate issuer in the Australian market, CFS Retail Property Trust (CFS Retail) (A), priced its third domestic transaction since 2009 on February 1. The firm added A$150 million (US$150 million) to the A$290 million outstanding in its May 2016 line at a margin of 160 basis points over swap, with the deal's leads saying the transaction saw more than double oversubscription.

Council of Europe Development Bank (CEB) (AAA/Aaa/AAA) priced A$250 million (US$253 million) in its first Kangaroo transaction of the year on February 2 following the announcement of the mandate for an increase to its December 2015 line a day earlier. The bond to be tapped is CEB's largest in the Australian market, with A$1.55 billion outstanding following the deal.

European Investment Bank (EIB) (AAA/Aaa/AAA) has increased its August 2020 Kangaroo line by A$400 million (US$399.9 billion) in what is its second tap of this bond in 2011. The line now has A$2.6 billion outstanding having been increased twice since its introduction in a A$1 billion transaction in July last year.

New South Wales Treasury Corporation (TCorp) (AAA/Aaa/AAA) closed its A$1.55 billion (US$1.55 billion) new February 2018 benchmark bond line on February 1. The transaction – which will be TCorp's first new issue following its mid-year funding programme update – was conducted via bookbuild and was significantly oversubscribed. It priced at 49 basis points over the January 2018 government bond.

With the Australia Day holiday halting the market mid-week, the only recent issuance activity in Australia was a Kangaroo launch by KfW Bankengruppe (AAA/Aaa/AAA). However, with the first domestic corporate bond of 2011 pricing unusually early in the year last week, many fund managers say they are waiting for the opportunity to snap up more paper from that sector.

On January 28, KfW Bankengruppe (KfW) (AAA/Aaa/AAA) priced its third Kangaroo transaction of the year – a A$300 million (US$296.7 million) tap to its March 2017 maturity. KfW has now issued A$1.6 billion of Kangaroos this year in the form of a new 2016 line inaugurated on January 12, and an increase to its 2020 maturity completed on January 20.

Investors in the US private placement (USPP) market continue actively to seek supply with most confident that last year's overall issuance volume – which reached close to US$50 billion – can be matched in 2011. With large portfolio managers reporting an almost even split between domestic and offshore allocations, there is also strong interest in further supply from the short list of preferred international jurisdictions – a list which includes Australia.

New South Wales Treasury Corporation (TCorp) (AAA/Aaa) has completed its half-yearly review of its 2010/11 budget, announcing that the semi-government's funding programme will remain unchanged from the target figure of A$10 billion (US$9.97 billion). The state funding agency tells KangaNews it is pleased with the increased number of offshore central banks participating in its deals, while it also hopes to increase its inflation-linked issuance.

On January 28, National Australia Bank (NAB) (AA/Aa1/AA) issued a new ¥56.3 billion (US$680.6 million) fixed and floating rate five-year Samurai bond, in the second Japanese transaction to come from a major Australian bank in 2011. The deal priced at the tight end of an original pricing guidance of 30-33 basis points over yen swap – with the issuer saying pricing is competitive to alternative markets – with both tranches achieving the same margins as ANZ's (AA/Aa1/AA-) January Samurai.

The Reserve Bank of New Zealand (RBNZ) announced the regulatory limit for covered bond issuance by local banks on January 21, with the cap – of 10 per cent of a bank's total assets – matching the hopes of domestic borrowers. The level is higher than the equivalent cap in other jurisdictions, and the limit – of 5 per cent – hinted at by the Australian federal treasurer, Wayne Swan, when he last year proposed the adoption of the asset class in Australia.