News
Following Royal Assent to the Tax Laws Amendment Act 2009 on December 4, all Commonwealth government securities (CGS) are now legally eligible for exemption from the non-resident interest withholding tax (IWT). Although intermediaries say there has not been an immediate impact in terms of buying activity from offshore, they remain hopeful that the removal will stimulate offshore demand for inflation-linked CGS product in particular.
Market users have offered a broadly positive response to a consultation paper from the Australian Securities and Investments Commission (ASIC) proposing a streamlined prospectus process for strong corporates who wish to issue retail bonds. And some believe the eventual result of the consultation could be a retail market offering Australian corporates a valid third option to wholesale and bank funding.
On December 10 Bank of Scotland Australia (BoS Australia) (A+/Aa3) priced an Australian government guaranteed March 2011 domestic bond with a total volume of A$1.4 billion (US$1.28 billion). The deal consists of two tranches: A$250 million of fixed rate notes pricing at 55 basis points over the June 2011 government bond and A$1.15 billion of floating rate paper which priced at 25 basis points over swap.
On December 8, the World Bank (AAA/Aaa/AAA) priced a NZ$125 million (US$89.25 million) increase to its December 2014 Kauri bond at 12 basis points over swap or 25 basis points over the April 2015 New Zealand government bond – the second increase to that particular line in less than a week with both issues coming to market at the same price.
One year after Commonwealth Bank of Australia (CommBank) (AA/Aa1/AA) launched the first Australian government guaranteed bank transaction, the sector has issued a total of around A$130 billion (US$119 billion) in nearly 400 transactions across currencies. And while the use of the guarantee has gradually declined, issuance has surpassed the equivalent of US$10 billion in every three month period.
A day after announcing details of its next round of financial support for the residential mortgage-backed securities (RMBS) market, the Australian Office of Financial Management (AOFM) has released more information on the "pipeline funding" strategy it expects to use to aid RMBS-dependent institutions. Under this part of the scheme, issuers and arrangers are invited to apply for a series of AOFM investments in successive RMBS deals.
Instead of the previous request for proposal (RFP) process, issuers will be invited to bring reverse inquiries to the Australian Office of Financial Management (AOFM) to secure part of the second injection of government money into the local residential mortgage-backed security (RMBS) market. In a December 7 notice, the AOFM also says it hopes to buy smaller proportions of selected RMBS than was the case with its first support package.
Bank Nederlandse Gemeenten (BNG) (AAA/Aaa/AAA) priced A$300 million (US$278.16 million) in a new three-year Kangaroo deal on December 3 – the issuer's first public transaction in the market for over three years. The agency recently priced its first Kangaroo transaction since November 2006 when it sold A$230 million of 2013 bonds in a private placement.
In the first Kauri transaction to price since November 6, the World Bank (AAA/Aaa) increased its December 2014 bond by NZ$175 million (US$126.93 million) to bring the total outstanding in the line to NZ$475 million. The December 3 transaction was anchored by domestic demand according to TD Securities (TD), which lead-managed along with ANZ.
With the A$500 million (US$462.4 million) increase to its 2014 line on December 2, European Investment Bank (EIB)'s (AAA/Aaa/AAA) issuance total in the Kangaroo market in 2009 reached A$6.05 billion – easily a record for a single borrower year. The latest deal brings the volume of EIB's 2014 line to A$2.4 billion, making it the second largest outstanding Kangaroo and just A$100 million smaller that the same issuer's 2013.
Bendigo and Adelaide Bank (BEN) (BBB+/A2/BBB+) priced its first non-government backed residential mortgage-backed securities (RMBS) transaction of 2009 on December 2, doubling its indicative size from launch on November 27 to A$1 billion (US$928.2 million). It also achieved a tighter margin on the largest tranche than those of other recent RMBS deals.
Bank of Queensland (BOQ) (BBB+/A2/BBB+) returned to the domestic market on December 2, pricing a A$1.1 billion (US$1.02 billion), floating rate 2013 line under the Australian government guarantee. It also tapped the line a day later, adding a further A$150 million "following further investor interest", according to lead managers RBS Group Australia and UBS.