insto - Australian financial markets

The week started from two significant euro bonds from Telstra and CBA, and ended with four new ABS transactions from Bankwest, BEN, Colonial, and Macquarie. NZ’s Southland Building Society also added two new RMBS tranches.

As part of our 2009 review, Insto caught up with Rick Sawers, Group Executive, Wholesale banking, NAB.

How has investment banking in Australia changed during 2009

The same week as the Queensland Government appointed advisors on the float of the QR National rail assets, the coal industry has revved up its attempt to trump the bid and force a trade sale. 14 of Queensland’s biggest coal companies are talking up their interest in offering to a substantial premium to what the market is currently expected to pay for QR, and intervene before the asset gets to an IPO, valued at between $3 and $7 billion.

But Queensland Treasurer Andrew Fraser said there was currently no offer “on the table from the coal companies.

The market capitalisation of the world’s top 30 banks grew by 70 percent over 2009 to US$2.8 trillion, according to a report from the Boston Consulting Group.

BCG’s report, entitled “After the Storm: Creating Value in 2010,” said that while the banking industry staged a remarkable turnaround over 2009, it still faced substantial challenges.

The report says that after bottoming out at US$3.1 trillion in the first quarter of 2008, the market capitalisation of the entire global banking industry more than doubled in ten months to US$6.4 trillion.

Last Thursday, CBA launched its first EUR transaction in 2010 - EUR1bn 4.375pct 10yr senior unsecured EMTN. The deal was also the first 10-year EUR senior trade by a financial institution in 2010.
Pricing:
• With a well oversubscribed orderbook of EUR2.4bn, the transaction was reoffered at Mid-Swap +98bpts, which is at the tight end of whisper guidance of Mid-Swap +105bpts.
• Despite the 7bpts tightening, the orderbook remained sticky losing only EUR100m of orders.
• In the secondary market the bonds tightened a further 4 bpts.
Distribution:
• 152 investors participated.

The numbers for resales of US homes surprised on the upside overnight (23 November US time), increasing by 10.1 per cent in October to a seasonally adjusted annual rate of 6.10 million, the National Association of Realtors estimated. This would make it the highest since February 2007. Commodities, especially gold continued their bull run, pulling up equities markets on both sides of the Atlantic. At the close, the Dow, Nasdaq and S&P 500 were all up by 1.3 to 1.4 per cent.

The global banking industry has recovered half of the market cap lost since the pre-crisis peak of $US9.7 trillion in October 07, reports the Boston Consulting Group. Market cap has doubled in the past seven months from a low of $US3.1 trillion in February 2009 to $US6.2 trillion at the end of September 2009.

One of the oldest arguments in funds management was re-ignited earlier this year when Standard and Poor's released data showing passive index-huggers had clearly out-performed active managers.

The roiling credit and equities markets have been a source of anguish for many super fund members, while the best of the hedge funds have seen opportunity amongst the chaos for quick profits. So how do investors rate such different investment styles and performances?

While many companies are reluctant to admit their potential greenhouse gas costs, the number of institutional investors seeking this information has spiked, repots Bernard Kellerman.

The Carbon Disclosure Project has evolved as the pre-eminent mechanism for communication between companies and investors on climate change and carbon exposure issues. It has been run globally for 7 years, but for the fourth year has been expanded to cover the top 200 Australian and top 50 New Zealand companies.

Robert Dunn, CEO of Opportunity International Australia, takes a business approach to a massive social problem. He spoke to Janette Wajs-Chaczko about delivering financial expertise to 1.8 million of the world’s poorest people.