insto - Australian financial markets

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.

Credit Union Australia plans to sell its first RMBS transaction in 2010 - A$500m Series 2010-1 Harvey Trust- via Westpac (AA-, stable).

Details are:

Issuer: Credit Union Australia
Amount: A$500m
Lead Manager: Westpac
Legal Final Maturity: April 2041
Trustee: Perpetual Trustee Company
Insurers: QBE Lenders Mortgage Insurance, Genworth Financial Mortgage Insurance

Class A-1 Notes:
Amount: A$470m
Expected Ratings: AAA/AAA
Average Life: 2.9yr

Class A-2 Notes:
Amount: A$20m
Expected Ratings: AAA/AAA
Average Life: 5.1yr

Class B Notes:
Amount: A$10m

 Reserve Bank of Australia Governor Glenn Stevens has suggested the central bank’s cash rate could rise by up to 1 percentage point in the months ahead to best manage the economy’s inflationary pressures.

The Australian Financial Centre Forum’s final report to the Federal Government has made a raft of recommendations designed to accelerate Australia’s development as a regional financial hub.

The report, released Friday by Financial Services Minister Chris Bowen, recommends the dismantling of tax barriers for foreign investors and banks, the simplification of corporate bond issuance and measures to lure foreign capital into the Australian funds management industry.

As the old ad slogan once said, “Oils ain’t oils”. The same could be said for AAA-rated investments in securitised mortgages – yes, even in Australia.

Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors, summed up the past week, and looks ahead to the week commencing 14 December, as follows:

The past week has seen worries about high sovereign debt in several countries and softer economic data from Europe and Japan weigh on investment markets. Our assessment is that sovereign debt problems are significant, but they are more likely to be speed bumps that will slow the recovery in key advanced countries rather than stop it. The good news is that Australia and most Asian countries (excepting Japan) don’t have much in the way of public debt.

The time is right for convertible bonds to be re-introduced as a viable corporate financing option. This year alone, offshore issuance of convertible bonds has topped $US80 billion, according to Thomson Reuters’ latest report. In Australia, until very recently, that figure was closer to zero.

Ninety four per cent of foreign fund managers surveyed recently by Australian law firm Henry Davis York see growth opportunities in the Australian funds management market but only 59 per cent would seriously consider Australia as a base for their Asia-Pacific funds management business.

HDY funds management partners, Liz Gray and Nikki Bentley conducted a survey of foreign fund managers during a series of conferences called Opportunity Australia, supported by the Australian Trade Commission (Austrade), which were held in London, New York and San Francisco during October 2009.

A recent global study undertaken by Deloitte actuaries and consultants on behalf of Australia’s IFSA found that the investment management costs and fees charged by Australia’s largest superannuation funds compare well against the more competitive funds in the world.