News
S&P Global Ratings (S&P) published a report on 26 June, positing that the Reserve Bank of New Zealand (RBNZ)’s proposed increase to bank-capital requirements will have minimal effect on the availability of credit in New Zealand, based on capital requirements stipulated by Australian Prudential Regulation Authority (APRA).
Balance-sheet asset growth is driving an increased funding need for Industrial and Commercial Bank of China New Zealand Branch (ICBC NZ), the issuer says. This translated into a NZ$200 million (US$132.6 million) print on 21 June which, according to KangaNews data, is the bank’s largest-ever New Zealand dollar deal.
Barclays received a blowout book in its recent Kangaroo deal, leading it to upsize to its maximum volume. The spread pick-up over domestic and global peers, lack of credit diversity and increasing acceptance of holding company (holdco) financial institution (FI) debt all gave domestic investors reasons to participate.
Coupons in New Zealand’s retail corporate bond market continue to reach new lows, with Mercury’s deal priced on 19 June a record low for a subordinated-capital deal. The issuer and arranger say that retail investors will take time to adjust to lower coupons, but with redemptions in New Zealand currently outpacing supply, demand has been forthcoming.
Westpac New Zealand (Westpac NZ) became the first New Zealand-based financial institution to issue a green bond on 18 June, with a €500 million (US$563.3 million) deal. The issuer says it wants to be a leader in the space and demonstrate the viability of the funding source to the local market.
Vicinity Centres (Vicinity) defied recent headlines around forecasts for the retail sector in its recent transaction, attracting significant demand from investors in Australia and Asia. Lead managers suggest that the issuer’s proactive engagement with investors and flexibility in meeting investor demand was key to the deal’s success.
On 19 June, following the release of the South Australia state budget on the previous day, South Australian Government Financing Authority (SAFA) revealed a term-funding requirement for the 2019/20 financial year of A$3.2 billion (US$2.2 billion). The issuer’s requirement is expected to decrease in the 2021 and 2022 financial years before increasing at the end of the out years.
On 18 June, following the release of the New South Wales (NSW) state budget on the same day, New South Wales Treasury Corporation (TCorp) revealed a borrowing requirement for the 2019/20 financial year of A$13.3 billion (US$9.1 billion). The requirement represents a A$1.4 billion increase from the estimate at the 2018/19 budget.
A dearth of public corporate issuance and clarity around interest-rate direction provided a window of opportunity for PACCAR Financial to bring a quickfire return to the Australian market. The transaction, the issuer’s second in nine months, was two-times subscribed based on a final book in excess of A$320 million (US$222.6 million).
On 11 June, following the release of the Queensland state budget, Queensland Treasury Corporation (QTC) revealed a borrowing programme for the 2019/20 financial year of A$9.9 billion (US$6.9 billion). The requirement is a A$700 million reduction from the forward estimate in the 2018/19 forecast.
Australia’s residential mortgage-backed securities (RMBS) market underwent a May and June renaissance with A$7.6 billion (US$5.3 billion) of primary supply priced. With more deals in the pipeline, intermediaries say liquidity dynamics continue to support the influx of deals. Meanwhile, a sentiment shift on the housing market is set to provide ancillary support.
Ongoing institutional support for unrated NEXTDC has allowed the returning issuer further to bolster its capital-requirement capabilities for the future. Capacity issues are not yet a valid concern, however the issuer is making plans for when unrated supply may eventually outpace demand in the local market.