insto - Australian financial markets

In early July, key participants in Australia’s syndicated loans market gathered for a roundtable in the Sydney offices of law firm Blake Dawson. Here is an edited transcript of the discussion, moderated by Insto editor Lachlan Colquhoun.

IN Q2, 2010, a theatrical classic has been touring Australia to sell-out audiences in which the absurdity of human existence has been laid bare. Samuel Beckett’s Waiting for Godot, written in 1948 and starring Sir Ian McKellen in the Australian production, tells the story of two characters who wait for a character called Godot, who never appears.

Independent analysts megermarket have released their list of Australia’s top M&A deals for July, detailing transactions worth around US$10.8 billion for the month. Top of the list is the sale of Healthscope to private equity groups Carlyle and TPG, a deal valued at US$2.6 billion. Goldman Sachs and Lazard advised the seller, with Bank of America Merrill Lynch, Barclays, Credit Suisse, Deutsche, Macquarie and UBS advising the bidders.

Nomura has announced three new senior hires in a further sign of its expanding Australian ambitions. But headhunters believe the bank had to pay over the odds to attract the trio and is now reassessing its recruitment goals for 2010.

In a sector as fast paced as finance, it is no surprise that higher education is also changing rapidly, and some universities are developing unique initiatives to ensure that the next generation of finance professionals will be pushing the industry to new heights.

Boston Consulting Group calls it the “regulation tsunami” set to overwhelm the world’s financial system. APRA says it is inevitable, but the local banking industry is wary and resistant. So how will the regulatory push play out in Australia, once all the shadow- boxing is done? By Lachlan Colquhoun.

On The one side, there is the Federal Government and the regulators. Australia needs to be a good G20 global citizen and move in concert with the rest of the world, to make the globe safe from future financial meltdown.

CBA is on track for a record-breaking full year earnings result of $6 billion despite signs of headwinds in the early part of 2010. CBA last week announced interim net earnings of $2.94 billion for the six months to December 31 in a result which featured a continuing fall in bad debts, but a dip in underlying profit for the last quarter. For the quarter ended March 31, CBA announced an unaudited third-quarter cash profit of $1.5 billion, up 30 percent on the previous year. Analysts saw a slippage of margins offsetting the positive of lower bad debt charges.

Dealogic is forecasting a strong year for Australian M&A, forecasting that locally based investment banks will share fees of US$103 million, the second highest on record after a bumper 2007. The local operations of Goldman Sachs JBWere, JPMorgan, Citigroup and HSBC showed significant jumps in profit, and this pattern is expected to be repeated when Bank of America Merrill Lynch, Credit Suisse, UBS, Macquarie and Deutsche Bank report at the end of the month.

Origin Energy Ltd has executed a syndicated loan facility for A$2.3 billion and US$200 million with a A$100 million guarantee facility. The facility closed significantly oversubscribed and Origin upsized by A$500 million as a result of the over subscriptions. The facility consists of three and five year revolving debt with A$1.9 billion maturing in five years and $700 million maturing in three years. Lead arrangers and bookrunners were ANZ, Bank of China, Bank of Tokyo-Mitsubishi, CBA, JPMorgan and NAB.

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.