insto - Australian financial markets

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

ANZ has appointed Steve Bellotti as Global Markets Managing Director, starting from Mar 1, reporting to Shayne Elliott, CEO Institutional.

Bellotti, 48, will be based in Sydney and lead the team for foreign exchange, capital markets, interest rates, commodities and derivatives, as well as specialist research and risk management.


Bellotti succeeds Gilles Plante who was appointed ANZ’s CEO North East Asia, Europe & America in December 2009.



What a quiet week due to holidays in China and the US. However, we saw the third government guaranteed issue since the announcement of the withdrawn of the wholesale bank funding guarantee, a highlight $2bn 5yr transaction from ING last Thursday.

ING A$2bn 5yr GG Bond

This week we saw three Aussie issuers going into Japanese and European markets; the second RMBS deal and the largest Kangaroo transaction (by World Bank) so far in 2010. In New Zealand, the World Bank also executed the largest Kauri bond on issue.

Domestic Market
BoQ launched an A$500 million RMBS transaction maturing on 7 May 2040, Series 2010-1 REDS, which will be priced mid-to-early this week against 1 month BBSW. This is the second mortgage-backed offer this year, following AMP Bank’s $1 billion RMBS issue in January.

ANZ JPY50bn min Samurai
ANZ is going to be the second Samurai issuer from Australia in 2010 after its 3-day investor roadshow in Tokyo ended last Friday. It completed the book building process last week for the issuance of a benchmarking size (JPY50bn min) Samurai to be priced this Wednesday. One of the joint leads said that the bank will issue a 5-year fixed rate tranche and a 5-year floating rate tranche, as well as a possible 7-year tranche, following Westpac’s step in January.

ANZ’s coming Samurai Westpac Jan 15 Samurai
Total Amount JPY50bn Min JPY111.3bn

Westpac raises US$2bn 144a USPP

Westpac has sold US$2 billion extendable bonds in the U.S. market. A spokesperson from Westpac told Insto that the private placement was launched a week ago and will settle tomorrow. Details are:
 

Initial Maturity: 14 Jan 2011
Final Maturity: 15 Jan 2015
Launch Date: 15 Dec 2009
Settlement Date: 22 Dec 2009
Issue Price: 100
The coupon is reset quarterly against benchmark US 3-month Libor. The spread is reset annually.

US led markets into a retreat as wary investors awaited the Federal Reserve's assessment of the US economy after a 1.8 percent surge in the November Producer Price Index. Among the major US indices, the Dow was off 49 points to close at 10,452; the Nasdaq lost 11 pts to 2,201 and the S&P 500 closed at 1,108 (down 6 pts, or 0.55 per cent).

The Fed has kicked off a 2-day policy meeting, with a statement on the economy expected on Wednesday US time (tomorrow night our time). According to Reuters, although the market does not anticipate any changes in the Fed's policy of holding US interest rates near zero, even a small change in tone can have an impact on investors' mood because cheap money has been one of the main drivers of the stock market's rally.

Financials pushed the broader market further downwards as reports showed a rise in credit-card charge-offs and Wells Fargo became the latest big US bank to announce plans to repay TARP funds, via a US$11bn equity raising.

Markets reacted positively to the news that the first sovereign default on sukuk bonds, will be avoided by a US$10bn (A$11bn) loan by United Arab Emirates’ central bank to Dubai. This comes just in time as Nakheel, the real estate arm of the state-backed conglomerate, Dubai World, was due to pay about US$4bn under an islamic bond contract from today.

At the close, the Dow Jones was up 30 points to 10501, while the Nasdaq declined half a point to 2212 and S&P 500 added 4 points to stand at 1114.

Bonds decline
US short dated treasuries fell on Monday (yields higher), as investors switched from safe-haven bond into equities following the Abu Dhabi bailout, CBA noted this morning that. US 10yr yields remained steady at 3.55 per cent with US 2yr yields up 4pts to 0.84 per cent.