News

A revival of the Kangaroo market for financial institutions (FIs) and 2010's second domestic benchmark for a big four Australian issuer joined the continuing flow of guaranteed deals for smaller issuers as bank bond flow ramped up significantly through the week. On March 5, HSBC Bank (HSBC) (AA/Aa2/AA) priced the second FI Kangaroo in two days – and the third in three years – with its A$1.5 billion (US$1.35 billion) 2015 maturity.

Inter American Development Bank (IADB) (AAA/Aaa) completed pricing on a A$375 million (US$338.1 million) increase to its August 2019 Kangaroo issue on March 4. The deal – IADB's fourth Kangaroo transaction of the year – brings the total outstanding in the issuer's 2019 line to A$1.1 billion out of its total A$5.95 billion in the Kangaroo market.

J.P. Morgan Chase (A+/Aa3/AA-), prised open the funding window for financial institutions (FIs) in the Kangaroo market on 4 March, pricing a five-year A$1 billion (US$901.6 million) benchmark. The transaction, which was launched on 3 March, is the first from a US FI since the same issuer sold A$950 million of fixed and floating rate five-year notes at 20 basis points over swap in June 2007.

International Finance Corporation (AAA/Aaa) achieved a significant upsize in the inauguration of its third Kangaroo line on March 3, eventually pricing A$1.1 billion (US$995.61 million) in its new March 2015 from a minimum size at the previous day's launch of A$500 million. Although this is IFC's first Kangaroo of the year it has now priced at least A$1 billion in each of the three years since its 2008 Kangaroo debut.

Bank of Queensland (BOQ) (BBB+/A2/BBB+) says the A$1 billion (US$897.5 million) government guaranteed March 2015 transaction it priced on March 1 will help term out the issuer's maturity profile in an environment where unguaranteed tenor continues to be harder to achieve. The fixed- and floating-rate deal priced at 79 basis points over government securities or 35 basis points over bank bill swap rate.

The A$600 million (US$532.38 million) new 10-year Kangaroo transaction closed on February 25 by Asian Development Bank (ADB) (AAA/Aaa/AAA) saw the majority of bonds placed with domestic investors. The RBC Capital Markets (RBCCM) and UBS Investment Bank-led transaction priced at 78 basis points over April 2020 Australian government bonds or around 27 basis points over semi-annual swap.

The third Australian residential mortgage-backed security (RMBS) transaction of 2010 priced on February 25, with Credit Union Australia (CUA) bringing A$650 million (US$579.93 million) to market in the Series 2010-1 Harvey Trust (Harvey 2010-1) transaction. Harvey 2010-1 is the issuer's first securitised transaction since March last year.

The A$500 million new September 2011 issue completed by Treasury Corporation of Victoria (TCV) (AAA/Aaa) on February 24 was a one-off, private market trade and not the inauguration of a new benchmark, the issuer says. The deal's lead managers, ANZ and UBS Investment Bank, say it was based on reverse inquiry while TCV had a specific client position it wished to cover.

New South Wales Treasury Corporation (TCorp) (AAA/Aaa) is taking an aggressive approach to moving away from federal government guaranteed funding, with the issuer announcing on February 24 that it will introduce three new unguaranteed benchmark lines by the end of March. The first of these new lines, the August 2013, will be brought to market via a A$750 million (US$669.98 million) tender on February 25.

Despite the success of its second new unguaranteed benchmark deal of 2010 – in which the issuer priced A$2.5 billion of February 2020 bonds – Queensland Treasury Corporation (QTC) (AA+/Aa1) is still not ruling out future issuance under government guarantee before the scheme's year-end expiry. The new transaction priced at 16 basis points over swap on February 23.

In its first deal in the Kangaroo market since May 2008, on February 23 European rolling stock agency EUROFIMA (AAA/Aaa) priced a A$200 million (US$179.76 million) increase to its January 2014 line, which now has A$1.2 billion on issue. The issuer confirms that the deal was capped in size as it is a back-to-back funder.

The first Kangaroo transaction for nearly a fortnight priced on February 22 as KfW Bankengruppe (KfW) (AAA/Aaa/AAA) sold a A$250 million (US$225.2 million) increase to its May 2015 line, bringing the bond's total outstanding to A$1.25 billion. The deal priced at 82 basis points over the benchmark April 2015 Australian government bond, which ratesheet data indicates equates to around 40 basis points over swap.