News
Speculation is growing that the forthcoming Australian federal budget will include a commitment to reigniting the market for inflation-linked commonwealth government securities (CGS), which was suspended in the 2003 budget when Australia concentrated its then-limited federal debt issuance in shorter-dated treasury bonds.
Tabcorp (BBB+) closed its five-year bond offer on April 30 having added A$84 million (US$60.86 million) to the initial A$200 million allocation to the institutional and brokerage sector. With around 90 per cent of the total paper being placed with retail investors, lead managers believe the transaction will spark further corporate issuance in the Australian retail market
On April 29 Rabobank Nederland (AAA/Aaa) (Rabobank) set the margin on its New Zealand market PIE (portfolio investment entity) Capital Securities transaction at 375 basis points over swap and announced it has upsized the transaction, to NZ$330 million (US$186.85 million) from the indicative level of NZ$200 million at launch.
The latest residential mortgage-backed security (RMBS) to be launched with backing from the Australian Office of Financial Management (AOFM) follows the pattern of recent asset-backed deals in Australia, splitting its senior tranches between a fast pay piece and a much larger one with a longer weighted average life (WAL).
National Australia Bank (AA/Aa1/AA) (NAB) entered the market for bonds not covered by the Australian government guarantee for the first time on April 29 with the largest such transaction yet seen – a total of A$1.5 billion (US$1.07 billion) of fixed and floating rate three year bonds.
In its annual corporate default and ratings transitions study for the Australian and New Zealand market in 2008, Standard & Poor’s (S&P) says the downgrade to upgrade ratio increased significantly from the levels of recent years but had yet to reach its peak from the last Australian economic slowdown.
Having completed its most recent round of residential mortgage-backed security (RMBS) investments, on April 17 the Australian Office of Financial Management (AOFM) announced the next three originators to which it will allocate funds as part of its A$8 billion (US$5.75 billion) injection into the Australian mortgage sector.
Over A$1 billion (US$724 million) of residential mortgage backed securities (RMBS) has been priced by a brace of Australian issuers in the past week, but with the Australian Office of Financial Management (AOFM) continuing to be the cornerstone investor in all transactions market participants are starting to ask for the agency to extend its buying programme beyond its current A$8 billion commitment.
Rabobank Nederland (Rabobank) is seeking indications of interest for a return to the New Zealand hybrid market, with the issuer planning to use the portfolio investment entity (PIE) structure to offer favourable tax treatment to retail investors. The PIE Capital Securities will be issued by a special purpose entity, Rabo Capital Securities, established in New Zealand as a subsidiary of Rabobank.
Lead managers on retail offerings in the Australian market in the past two months say all three deals have received strong support from retail investors, who they say are ready to look at income-generating assets offering good margins and a high yield. Investors have been offered five-year senior bonds of Tabcorp (BBB+), 10NC5 lower tier two (LT2) paper from AMP Group (AMP) (A/A2) and the mandatory convertible hybrid securities sold by Westpac Banking Corporation (Westpac) (AA/Aa1/AA-).
In a sign that domestic investors are gaining in confidence, Commonwealth Bank of Australia (CommBank) (AA/Aa1/AA) today launched its third non-guaranteed trade since the government guarantee was introduced last year. Pricing took place just 3.5 hours later and the total volume of the three-year bonds exceeded expectations - A$1.2 billion (US$859 million) was priced in fixed and floating rate notes (FRNs) at mid-swap and bank bill swap rate (BBSW) plus 130 basis points. Thirty-five investors participated in the trade.
On April 4 Bank of Queensland (BBB+/A2/BBB) priced A$712 million (US$507 million) of residential mortgage-backed securities across four tranches via its Series 2009-1 REDS Trust. The deal was upsized from A$668.7 million. This transaction indicates pricing consistency is starting to be established in the fast-pay RMBS tranches.