News

Five months after roadshowing in Australia with a desire to become a regular issuer in the market, on August 18 Kommuninvest (AAA/Aaa) priced its debut Kangaroo transaction. The Swedish local government funding agency issued a A$200 million August 2015 bond, in what was the second Kangaroo debutant from the supranational, sovereign and agency (SSA) sector in 2010.

Lead managers on the six-year issue launched by Greenstone Energy (Greenstone) (NR) on August 13 say that although the issuer is an unrated credit, they believe the familiar name of the company combined with pent-up retail demand will attract investors in large numbers. Greenstone is offering a minimum of NZ$100 million (US$70.1 million) in the deal with room to upsize by up to the same amount.

On August 17, HSBC Sydney Branch (HSBC Sydney) (AA/Aa2/AA) priced A$500 million (US$448.8 million) in a three-year fixed rate transaction – its first issue in two years. The bonds priced at their indicative margin of 95 basis points over semi-quarterly swap, having launched the day before.

On August 16, Bank of Queensland (BOQ) launched its second residential mortgage-backed securities (RMBS) transaction of 2010, in what is also likely to become the first large RMBS deal in Australia since early July. BOQ's Series 2010-2 REDS deal has an indicative volume of A$750 million (US$669.7 million) and is expected to price by August 19.  

Two recent benchmark-sized transactions from Australian branches of international banks have revived speculation about a return of offshore banks as issuers in Kangaroo format. However, while there are hopes of broader Kangaroo issuance before the end of the year market participants say there are still enough headwinds to make the return of financial institutions (FI) unlikely as an imminent prospect.

Australia Pacific Airports Melbourne (Melbourne Airport) (A-/A3) says a positive reaction to its recent roadshow and a desire to refinance well ahead of maturities led to the August 13 pricing of A$350 million (US$315.2 million) of four- and six-year paper. The issuer also says its position as the highest-rated Australian airport made it an appealing credit for investors.

Volkswagen Financial Services Australia (VW Australia) (A-/A3) launched and priced its fourth domestic medium-term note (MTN) issue since June last year on August 12, upsizing the three-year deal to A$125 million (US$112.2 million) from A$100 million. The deal becomes the first Australian corporate issue in August, although market sources say the corporate pipeline is strong and another transaction has already launched.

Signs of life appear to be emerging in the New Zealand securitisation arena, with one issuer recently having established a programme and at least one other understood to be sizing up a deal. But market participants are tempering expectations by stating that this year's deal flow is likely to be limited as investors continue to be wary of non-bank names, with more activity anticipated to come through in 2011.

Following a clutch of shorter-tenor transactions, KfW Bankengruppe (KfW) (AAA/Aaa/AAA) returned the focus of the Kangaroo market to the long end on August 11 with the pricing of a new 10-year line. The last four Kangaroo deals, stretching back to late July, have been of three- or five-year duration while the last longer-dated offering was European Investment Bank (EIB)'s (AAA/Aaa/AAA) A$1 billion (US$915.4 million) 10-year on July 22.

Barclays Bank Australia Branch (Barclays Australia) (AA-/Aa3) priced a new five-year benchmark-sized transaction on August 10 in its second ever public deal in the Australian market. The issue comprises A$1 billion (US$913.3 million) of floating-rate notes and a A$500 million fixed-rate tranche.

With European bank stress tests and a broadly well-received update from the Basel Committee on Banking Supervision in the rearview mirror, Australian and New Zealand issuers are finding a more receptive audience for their bonds. While deal flow is picking up gradually, a spate of roadshows and intermediary reports of plentiful mandates suggest deal flow is right back on the agenda.

Australian bank funders and liquidity managers describe the July 26 release from the Basel Committee on Banking Supervision as a significant breakthrough for the local banking sector, with an expectation that funding tasks will be eased and that liquid asset definitions may become less onerous. However, further clarity is likely to be required before liquidity managers significantly alter their ultra-conservative investment behaviour.