News
New Zealand Local Government Funding Agency is confident its latest Kangaroo deal demonstrates ongoing support for its name in Australian dollars, despite its recent loss of local repo eligibility. With four points now on its Australian dollar curve, the issuer says its new issuance focus will shift to building up line size rather than adding new benchmarks.
The size and breadth of demand for Telstra’s latest deal stands out – especially the scale of bids for 10-year corporate bonds. But deal sources say buy-side interest in corporate transactions is wider than it was a year ago and should support supply from a range of issuers.
ORDE Financial made its debut in the benchmark residential mortgage-backed securities market on 22 February, printing volume – A$1 billion in total – that KangaNews believes to be the most ever by a debutant nonbank issuer. The issuer shares perspectives on funding and execution strategy, a healthy domestic securitisation market and plans to grow its investor base further in future.
The result of tier-two transactions from domestic peers influenced Macquarie Bank’s decision to price its 10-year non-call five-year tier-two deal on 22 February. Ongoing demand for bank supply came through in a jumbo orderbook and a margin that equals those offered just weeks earlier by big-four banks.
The Australian dollar market has been hot at the start of 2024 but, as the H1 corporate issuance window opens, so are core global markets. Intermediaries say the euro and US dollar markets are both offering highly conducive conditions, providing Australian issuers no shortage of reasons to jet abroad sooner rather than later.
There is no sign of the receptive primary market for financial institution issuers in Australian dollars losing momentum, according to issuer and intermediaries on the latest such deal. As has been the case in many recent transactions, a strong bid out of Asia was instrumental in driving early momentum in MUFG Bank Sydney Branch’s floating-rate-only deal.
A desire to expand its US dollar curve brought Westpac NZ back to the 144A market for a second transaction. On the way to landing what the issuer believes to be a record-breaking orderbook for a foreign currency deal from a New Zealand borrower, the deal echoed recent financial institution issuance in Australia by deriving early momentum from Asian demand.
Canada Pension Plan Investment Board returned to the Kangaroo market on 22 February with a 10-year print that smashed the record for deal size at this duration by any borrower outside the domestic government sector. The issuer says the scale of demand took it by surprise despite its commitment to introducing new bond lines via substantial benchmark transactions.
New Zealand Local Government Funding Agency is confident about its ongoing Australian dollar issuance prospects despite expressing disappointment at the Reserve Bank of Australia process that saw the issuer initially granted repo eligibility before having that status withdrawn. The issuer believes the outcome highlights anomalies in the expanded list of assets eligible for repo in Australia but will not take its claims further.
Australian dollar market capacity for financial institution issuance at the start of 2024 continues to surprise even seasoned market participants. Rabobank Australia became a beneficiary on 20 February, pricing A$2.15 billion – comfortably its largest print size of all time – with deal sources saying the buy side has not issued a murmur of indigestion so far.
Firstmac’s first residential mortgage-backed securities transaction of 2024 featured a substantially scaled lead manager bid and still matched the issuer’s record deal volume, as the securitisation market remains hot in early 2024. The deal upsized beyond the borrower’s expectations and final volume outcome was capped only by asset capacity.
An earlier than typical start to Australian securitisation deal flow in 2024 has allowed issuers to take advantage of largely supportive conditions on the buy side. In particular, pricing on mezzanine tranches continues to move tighter – as evidenced by the latest addition to Columbus Capital’s Triton programme.