insto - Australian financial markets

Bond markets were quiet last week with attention focused firmly on the federal Budget and eurozone debt woes. RESIMAC priced the first low-doc RMBS issue since 2008 after the budget. It was oversubscribed and the AOFM got only $10 million worth of the issue, despite standing ready to take up to $125 million under its RMBS support plan.

Tuesday

Federal budget
Treasurer Wayne Swan delivered a cautious budget that included the politically all-important early return to surplus.

The first week of May saw the RBA raise the cash rate once again by 25bp to 4.5pct. This hike was in line with consensus expectations and is the sixth increase in the current cycle that started in October 2009. In spite of this news, it was another fairly quiet week in the debt markets, with BNG conducting two transactions, an A$50m tap to its Jan 2015 EMTN and a NZ$50m tap to its Dec 2014 EMTN. Telstra also launched and priced a NZ$100m Kauri bonds, after holding a roadhsow the week before.

*EMTN*

After the Anzac long weekend, the markets remained fairly quiet early on in the week, and picked up slightly towards the end with Rabobank and BNG both pricing EMTN’s. Meanwhile news of the largest ECM deal of the year by QBE filtered through, on Friday and also on Friday Telstra Corporation Limited held a Kauri bond investor update hosted by BNZ, CBA and Westpac. Meanwhile SACL also announced that it was holding a roadshow in Melbourne and Sydney this week to give an update on its operating and financial performance.

*EMTN*

In what has become somewhat of a trend, the week began slowly with the ADB pricing an increase on its 2020 Kangaroo bond issuance. The activity in the market from Wednesday onwards picked up with the QTC and ASCF both pricing their transactions on Wednesday. Kfw priced another increase to its 2019 Kangaroo and Rabobank’s Australian branch priced an A$700m dual tranche tap to its 2014 bond on Thursday. The week then died down on Friday, with the Anzac long weekend approaching.

*Domestic Issuance*

The week started off quite slowly, with launches from The World Bank and Dexus Property Group and some action from the AOFM. It picked up considerably towards the end of the week, with NSWTCorp and NTTCorp pricing their domestic issuances and there was much activity focused on the Kangaroo market, with the World Bank, EIB and CEB all pricing their taps.

*Domestic Issuance*

It was a moderately busy week despite the Easter break, the RBA lifted the cash rate by 25 basis points to 4.25pct, making it the fifth increase in the past six meetings. Activity in the Australian market picked up towards the end of the week, including domestic issuances from Westpac and BOS, while CBA attracted investors offshore. The market also returned to the subordinated tranches with CNH participating in the securitisation market.

*Domestic Issuance*

With the Easter long weekend approaching, the Australian debt market was relatively quiet this week.

*GG*

We saw the expiry of the Government Guarantee Scheme on 31 March 2010. Under this scheme, 16 banks along with other lenders through this scheme issued over US$130bn. The last transaction to use the Scheme was from Bananacoast Community Credit Union.

The Australian debt market had a fairly slow start to the week, picking up towards the end with a number of EMTN transactions from NAB and Volkswagen Australia, and Rabobank Australia created some activity going offshore with its transactions. Nordic Investment Bank also issued towards the end of the week. There was also a flutter of activity from the AOFM and a number of people moves.

 *Domestic Issuance*

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.

*MTN*
BNP Paribas Sydney branch (AA/Aa2/AA) launched and priced its A$750m senior unsecured MTN due on 18 Mar 2015 via BNP, NAB, and Westpac last Thursday. The $300m 6.75pct fixed rate notes have an issue price of 99.72pct to yield 6.817pct. The $450m FRN have an issue price of 100par with a spread of 3mth BBSW+110bpts/ ACGB 6.25pct Apr 2015+ 146.2bpts. The deal, with a pricing guidance of BBSW+ 115bpts, will settle on Mar 18.