News

Council of Europe Development Bank (CEB) (AAA/Aaa/AAA) priced its fourth Kangaroo deal of the year on September 29 - a new A$300 million (US$290.4 million) 10-year line. The deal substantially extends CEB's Kangaroo curve from its previous end point of December 2015.

Issuers on- and offshore believe the Australian dollar market continues to develop as a consistent source of funds as issuance in both the Kangaroo and domestic arenas shows signs of added diversity. Recent weeks have seen new issuer sectors returning to the Kangaroo market – with covered bond borrowers also hovering – while the corporate pipeline in the domestic market is also starting to translate into deal flow.

The new April 2014 benchmark bond listed via tender by Western Australian Treasury Corporation (WATC) (AAA/Aaa) on September 23 came to market with a margin slightly tighter than that predicted by analysts. The agency placed a face value of A$500 million (US$478.4 million) of the 5.5 per cent coupon bond with by tender, attracting a cover ratio of 2.42, and a further A$616 million in a subsequent consolidation offer.

Speculation is mounting that the Kangaroo covered bond market could re-open as early as next week following a brace of roadshows from Canadian banks. However, at least one roadshow-arranging intermediary is playing down reports that a deal will inevitably take place, saying only that investor feedback is currently being assessed and a transaction will emerge if conditions are favourable.

The recent South Australian state budget has resulted in an increase to the South Australian Government Financing Authority (SAFA)'s (AAA/Aaa) indicative funding requirement for the 2010/11 financial year. The expected target figure is now A$5.6 billion (US$5.3 billion), up from A$5.1 billion before the budget on the back of an increased net debt requirement from the general government sector.

The Province of Ontario (Ontario) (AA-/Aa1) returned to the Kangaroo market with a new 10-year deal on September 22. The A$275 million (US$262.9 million) deal is the first transaction from a Canadian province in the Australian market since Ontario itself last placed a Kangaroo bond, in November 2006.

Following its recent update of fixed income investors in Australia and Asia, on September 22 Mirvac Group Finance (Mirvac) (BBB) priced a new six-year maturity domestic deal with an upsize to A$200 million (US$190.8 million) from launch volume of A$150 million (US$141.9 million). The transaction is Mirvac's second in the Australian market this year and achieved a similar margin to the issuer's March deal.

Fleet Partners priced its inaugural asset-backed securities (ABS) deal on September 21, taking A$178.8 million (US$168.6 million) across six tranches. The securitisation, FP Turbo Series 2010-1 Trust, is backed by motor vehicle leases with an average seasoning of 16 months.

The World Bank (AAA/Aaa/AAA) issued a new A$700 million 2020 maturity Kangaroo bond on September 21 in its third Australian market transaction of the year. This year was already a record for World Bank Kangaroo issuance, with the supranational having now priced A$3.6 billion (US$3.4 billion) in three transactions – easily surpassing its previous record of A$1.4 billion from 2009.

Although the recent run of strong issuance from the bank sector continued in the past week, there are also signs of the domestic corporate market stirring with several corporates roadshowing and a number of deals in the pipeline. But while some corporates are gaining confidence in the market, others are still casting their net offshore for perceived security of pricing and volume.

ME Bank's third residential mortgage-backed securities (RMBS) transaction of the year priced on September 23, with the deal upsized to total volume of A$1 billion (US$955.3 million). The deal, SMHL Securitisation Fund 2010-3, had an initial volume of A$800 million at launch and is the first Australian RMBS transaction to price since FirstMac's A$416 million issue from September 6.

On September 16, the Royal Bank of Scotland Australia Branch (RBS Australia) (A+/Aa3/AA-) mandated a A$250 million (US$234.2 million) increase to its August 2013 line. The transaction is expected to launch and price today, and will add to a line that currently has A$1.5 billion outstanding across fixed and floating rate tranches of equal volumes.