insto - Australian financial markets

If there was any doubt that 2009 was the year that the domestic bond market had got its groove back, it was well and truly erased in the third quarter, reports Jonathan Shapiro.

Conditions continued to improve, increasing the confidence of both issuers and investors.

From July to September, over A$30 billion of non-government bonds were printed, making it the busiest period of the year, exceeding Q2 total issuance by A$10 million and more than double the amount issued in the third quarter of 2008.

The global banking industry has recovered half of the market cap lost since the pre-crisis peak of $US9.7 trillion in October 07, reports Boston Consulting Group. Market cap has doubled in the past seven months from a low of $US3.1 trillion in February 09 to $US6.2 trillion at the end of September 09.

In other words, the banking sector’s TSR improved by more than 100 percentage points from 2008. (Total shareholder return – or TSR – is the metric preferred by BCG for measuring company performance. In broad terms, TSR consists of capital gains and free-cash-flow yields.) This makes the sector one of the success stories of 2009:

Fig 1: Total shareholder return, 1 Q1–Q3 2009 (%)

Sources: Thomson Reuters Datastream; BCG analysis.
Note: All TSRs were calculated after conversion to US dollars.

US stocks surged on Monday as M&A activity bounced back to life.

The S&P500 gained 1.8 per cent following three consecutive negative sessions after news of multi-billion takeovers in the biotech and technology sectors boosted sentiment. Financial stocks were among the days top performers, gaining about 3.4 per cent.

A three day winning streak for US stocks was broken as investors paused for breath.

The S&P500 index fell 0.3 per cent on Thursday following strong gains earlier in the week. The decline was amidst mixed economic data as housing starts rose a less than forecast 1.5 per cent while jobless claims unexpectedly declined. Financial stocks bucked the trend, trading higher during the session.

US Credit indices also paused for breath. The Markit CDX closed above the 100 mark, 4bps higher at 102.

Global stock indices were mixed on Thursday. US indices slid for the second consecutive day while European and Asian stocks, with the exception of China, reversed the previous session’s declines.

The S&P500 fell 0.56 per cent ahead of monthly employment data. While weekly jobless claims numbers were mildly positive, investors are remaining cautious ahead of non-farm payrolls on Friday, the key data point of the month.

Barclays Bank plc Australia, rated AA-/Aa3 has priced a A$1.5 billion three year bond issue at a margin of 165 basis points over swap/BBSW

The deal was split into a fixed rate tranche of A$500 million and a floating rate tranche of A$1 billion.

The fixed rate tranche pays a coupon of 6.75 per cent, at a yield of 6.95 per cent and a capital price of 99.467 at a margin of 165 basis points over swap. The floating rate notes priced at par at a margin of 165 basis points over BBSW.

US stocks surged out the gates in August as strong manufacturing data added fuel to a strong market rally.

The Dow closed up 1.25 per cent to 9289 while the S&P500 broke the 1000 point barrier gaining 1.53 per cent to 1,003. The index reached an important technical milestone but remains 36 per cent lower than its all time high.

Barclays private banking arm Barclays Wealth is aiming to double the amount of assets in the region in the next three years, and would consider acquisitions to bulk up, Robert Morrice, chairman and chief executive of Barclays in Asia Pacific, said at the Reuters Japan Investment Summit.

Barclays Wealth should have over US$10 billion in assets under management in Asia-Pacific excluding Japan by the end of the year, and Morrice said he wants to reach US$20 billion by 2012.