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.

While the rest of the world saw a marked decrease in M&A activity over the course of 2009, the Asia- Pacific region held strong. With 2194 announced deals worth an aggregated US$412.4 billion in 2009, the region finished the year with a gain of 5 per cent in terms of total value and a small drop of 5 per cent in terms of volume compared to full year 2008 numbers.

As part of our 2009 review, Insto caught up with Ian Saines, Group Executive of Institutional Banking & Markets, Commonwealth Bank of Australia.

How has investment banking in Australia changed during 2009?

2009. Three consecutive rate rises, record deal volumes, diverse issuers, and significant credit spreads. We saw the debut of government guaranteed issuance and semi-government syndicated transactions. We saw true corporate bonds and the rediscovery of retail funding channel. Australia proved that it can have a ferocious and healthy bond market, Sonia Han reports.

Mark Johnson chaired the Australian Financial Centre Forum’s report “Australia as a Financial Centre: Building on our Strengths” which was released for discussion in January. The report made 19 specific recommendations to the government, from tax reform to changes to corporate bond structures, designed to facilitate growth in the financial sector, and a greater inter-reaction with Asian markets. Mark Johnson spoke with Insto soon after the report was released.

This week RBA decided to lift cash rate by 25 basis points from 3.75pct to 4pct. We also saw a string of Kangaroo issuance, along with Eurobonds from local issuers.

Week of Kangaroos

Inter-American Development Bank has launched $300 million minimum increase to the 6.5pct 20 Aug 2019 Kangaroo via CBA and TD Securities. The deal will be priced later this week.

This is IADB’s third Kangaroo issue this year. In January, IADB launched a $750m 5.375pct 27 May 2014 Kangaroo tap via CBA and HSBC, as well as a $500m 5.5pct 29 May 2013 Kangaroo via ANZ, JPM and UBS.

South Canterbury Finance’s long-term rating has been lowered to BB from BB+ by Standard & Poor’s and placed on CreditWatch Negative due to asset quality deterioration.

Yesterday, the New Zealand finance company announced to shareholders they were suffering high loan-loss provisions.

‘Although the capital injection into SCF will help absorb these bad debt charges, it does not, by itself, restore financial strength to a level that we consider is consistent with a BB+ rating’, said Derryl D’silva, Credit Analyst from S&P.