News

Two recent deals in New Zealand illustrate the delicate dynamics of the country's retail and wholesale markets, with Christchurch City Council (Christchurch)'s AA+ NZ$50 million (US$35.95 million) 2012 transaction placed with institutional buyers while the NZ$125 million 2014 from Auckland International Airport (Auckland Airport) (A-) attracted predominantly retail demand.

An elite group of nearly 40 major global investors from Asia, Europe and the Americas have received a bullish picture of the Australasian economy at a fixed income conference hosted by Commonwealth Bank of Australia (CommBank) and Queensland Treasury Corporation (QTC). Speakers at the event included the central banks and government funding agencies of Australia and New Zealand, as well as the four largest Australian semi-government treasury corporations.

The Australian Office of Financial Management (AOFM) hopes to use the second injection of up to A$8 billion (US$7.36 billion) of Commonwealth government money allocated to support the domestic residential mortgage-backed security (RMBS) market to complement the emerging recovery in third party demand for the asset class rather than being the sole bidder for securities.

Having launched the transaction with a target volume of A$100 million (US$92.33 million) the day before, Downer EDI (Downer) (BBB) priced its new October 2013 maturity bond on October 22 with an upsize to the maximum quantity of paper the issuer was prepared to print: A$150 million. Margin on the deal was in line with the indicative level, at 375 basis points over swap.

New South Wales Treasury Corporation (TCorp) (AAA/Aaa) priced the maximum target volume of A$1.5 billion (US$1.39 billion) in its new 2020 benchmark line on October 22, with total bids on the deal of almost double the eventual size. The syndicated deal was TCorp's first new line to be brought to market with the expectation of coverage under the Commonwealth government's guarantee programme.

The residential mortgage-backed security (RMBS) deal priced on October 21 by Resimac saw participation from third party investors in tranches across the deal alongside cornerstone investment from the Australian Office of Financial Management (AOFM), lead managers say. The A$290 million (US$267.67 million) Premier Series 2009-2 RMBS saw participation from 10 third party investors as well as the AOFM.

Kiwibank (AA-) priced the first financial institution (FI) Kangaroo bond for over two years on October 15, selling A$250 million (US$228.15 million) of fixed rate, five-year notes at a margin of 42 basis points over bank bill swap rate (BBSW). The bonds are covered by the New Zealand government guarantee and are rated AA+/Aaa/AAA in line with the sovereign's foreign currency credit ratings.

The settlement of its C$300 million (US$292.88 million) 3.625 per cent five-year deal on October 14 means Commonwealth Bank of Australia (AA/Aa1/AA) has successfully issued just the second Maple bond of 2009 – the first with a fixed coupon. However, TD Securities (TD), which lead-managed both Maples, says it is too early to call a revival of the market and anticipates it will take a while for sovereign, supranational and agency (SSA) issuers to make a comeback.

The October 9, A$200 million increase to Council of Europe Development Bank (CEB)'s (AAA/Aaa) 2014 line saw demand coming primarily from domestic investors, in contrast to other recent Kangaroos where the international bid has taken the majority of paper. Leads on the CEB deal say 75 per cent of bonds were placed with Australian buyers.

The first Kangaroo deal sold by Kommunalbanken Norway (KBN) (AAA/Aaa) in over two years attracted final volume of A$350 million (US$316.16 million) to the five-year maturity transaction. The October 9 deal is therefore the issuer's largest in the Kangaroo market, with volume exceeding launch expectations on the back of a book of over 30 accounts.

With its annual funding requirement more than doubling since 2007/8, the World Bank (AAA/Aaa) says it could become a more consistent presence in the Kangaroo market in future. The issuer priced its first Australian market deal for over three years on October 7, taking away a total of A$1.4 billion (US$1.27 billion) in the largest ever Kangaroo from a supranational, sovereign and agency (SSA) borrower.

On October 8 Bank of Scotland Australia Branch (BoS Australia) (A+/Aa3) priced a new Australian government-guaranteed line in the domestic market. The January 13 2011 deal led by J.P. Morgan and Westpac Institutional bank totals A$1.25 billion (US$1.13 billion) and is the third transaction priced by the bank in the Australian market this year, bringing the total volume in 2009 from the issuer in this market to A$4 billion.