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.

With many conventional sources of funding under pressure, alternatives – including sharia-compliant systems – are being taken far more seriously, reports Jane Lee.

The global financial crisis has renewed interest in Islamic finance and the possibility of greater integration with the conventional financial system in Australia.

Macquarie issues SMART 2009-1 ABS deal

Thursday, 6 August saw a US$500m 144a/RegS 10 year bond issue by Macquarie Group, rated A-/A2. The bonds priced at UST+395bps. Leads were BOAMER, HSBC and RBS.

The deal follows a US$1bn 5yr bond issue by Macquarie Group on 31 July 2009.

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.

Credit remains in rampant mood with global credit indices surging past old milestones and honing in on new ones. With confidence up and investors scrapping for limited stock of corporate bonds, there's no sign of a reversal in its upward trend.

In the US, the CDX narrowed to 110bps while in Europe the Markit iTraxx traded comfortably below 100, and as low at 88bps at Friday; close. Merrill Lynch’s investment grade corporate bond index is up 2.2 per cent in July and over 12 per cent higher for the year. It’s the best start to the year for the asset class since 1995.

Macquarie Group has priced US$1b of 5yr 144a/Reg bonds. The deal was announced on 30 July and attracted strong demand with the order book growing to US$3bn. The launch price of 475bps over UST is 50bps inside of the initial price talk.

According to research by the mergers & acquisitions intelligence service mergermarket, a total of 293 deals worth A$62bn were announced in Australia for the 1 July 2008 to 30 June 2009 financial year. Some stats and comments from mergermarket: