News

In a relatively quiet week for offshore issuance from Australasian names the most apparent trend was the reopening of currency markets outside the US dollar, with transactions priced in Canadian dollars, Swiss francs and – with easily the most volume – yen. However, despite Westpac Banking Corporation (Westpac)'s (AA/Aa1/AA-) ¥111.3 billion (US$1.22 billion) Samurai deal there was, for once, more Kangaroo market activity than issuance going offshore.

Supranational, sovereign and agency (SSA) Kangaroo deal flow continued on January 14, with three more deals pricing for a total of A$700 million (US$650.65 million) and a fourth expected to complete a day later. Kangaroo volume for January has now reached A$3.75 billion across nine priced deals, with six issuers – all from the SSA sector – active to date.

Asian Development Bank (ADB) (AAA/Aaa) headlined another busy day in the Kangaroo market on January 12 with the inauguration of a A$1 billion (US$927 million) January 2015 bond. The market was also tapped by KfW Bankengruppe (KfW) (AAA/Aaa/AAA), which priced a A$300 million increase to its August 2013 maturity – the issuer's second transaction in less than a week.

In the absence of any domestic deal activity from local issuers, the first full week of 2010 has been dominated in the Australian market by the familiar sight of local banks' activity in the US market being only partly offset by Kangaroo flow. In total, three US deals from Australian banks netted US$5.75 billion while four Kangaroo transactions accounted for A$1.75 billion (US1.6 billion).

Kangaroo primary market volume reached A$1.75 billion (US$1.6 billion) in the nascent new year on January 8 as Rentenbank (AAA/Aaa/AAA) added A$200 million to its July 2014 line, bringing its total size to A$1.2 billion. The transaction is the fourth Kangaroo deal to price in just three days, with all the deals to date being increases to existing 2014 or 2019 lines.

European Investment Bank (EIB) (AAA/Aaa/AAA) priced a tap to its August 2019 Kangaroo line on January 8, selling A$450 million (US$412.43 million) of bonds at a tighter margin than the previous 2019 Kangaroo – KfW Bankengruppe (KfW)'s (AAA/Aaa/AAA) A$350 million trade from the previous day. The increased line is now EIB's third largest in the market, with A$2.1 billion outstanding.

Having already increased its Kangaroo market outstandings by A$2.625 billion (US$2.44 billion) in less than a year – in the process leaping from 13th largest Kangaroo borrower to fifth – Inter-American Development Bank (IADB (AAA/Aaa/AAA) believes it can develop its Australian presence still further. The supranational priced its first deal of 2010 on January 8, selling A$750 million in a tap to its May 2014 line.

The Kangaroo deal placed on January 6 by KfW Bankengruppe (KfW) (AAA/AAA/AAA) – the first of 2010 – attracted predominantly offshore demand, according to the issuer. However, with one third of the paper picked up by domestic buyers KfW is hopeful that 2010 will be another strong year overall for the supranational, sovereign and agency (SSA) Kangaroo market.

Sources in the bank funding and liquidity management sectors say the extension to the Australian Prudential Regulation Authority (APRA)'s process of revising its capital and liquidity requirements – which was revealed in a letter from the regulator to authorised deposit-taking institutions (ADIs) on December 18 – came as no surprise. And the response to the extension is generally positive, with most arguing it is worth taking the necessary time to produce the best possible outcome.

Westpac Banking Corporation (Westpac)'s (AA/Aa1/AA-)  first residential mortgage-backed securities (RMBS) deal since May 2007 was upsized to A$2 billion (US$1.76 billion) for pricing on December 18. The Series 2009-1 WST Trust (WST 2009-1) was launched as an offering of a minimum of A$920 million in class A senior notes, with a further A$80 million divided between two subordinated tranches.

On December 15, Stockland Trust Management (Stockland) (A-) issued a A$300 million (US$272 million) fixed rate February 2015 bond after finalising the buyback of A$175 million of outstanding paper from its June 2011 line. It is understood that there was a narrow window of opportunity for the deal to be completed before the holiday slowdown, with deal sources confirming the buyback component of the transaction made it a likely candidate to be successful in this small timeframe.   

The closing of an innovative philanthropic bond deal from the University of Canterbury (Canterbury Uni) (NR) headlined a busy New Zealand market last week, with the total volume of issuance reaching NZ$565 million (US$409 million). There are also hopes that Canterbury Uni's strategy can be replicated by other funders in the university space.