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After a relatively slow period for issuance in offshore currencies, Australasian banks have conducted some activity in sterling and yen in recent weeks with National Australia Bank (NAB) (AA/Aa1), Commonwealth Bank of Australia (CommBank) (AA/Aa1) and Macquarie Bank (Macquarie) (A-/A2) securing the equivalent of over A$1 billion (US$775.5 million) each – the former in two deals, one of them public and unguaranteed.

Fairfax Media Group (Fairfax) (BB+) announced on May 21 that it is “considering” a buyback of its A$200 million (US$154.82 million) June 2011 domestic bond, with market sources saying the issuer is attempting to take an opportunity to replace the public bond with a cheaper source of debt funding.

Following a ratings review commenced in late February, Moody’s Investors Service (Moody’s) downgraded the state of Queensland and Queensland Treasury Corporation (QTC) from Aaa to Aa1 on May 21. Both state and treasury corporation were downgraded by Standard & Poor’s in February on the back of falling revenues.

On May 19 CFS Retail Property Trust (CFX) (A) priced a A$125 million (US$96.68 million) increase to its 5.75 per cent September 2012 bond at the expected level of 475 basis points over swap. Lead managers say the deal was more than twice oversubscribed and are confident it will pave the way for more wholesale corporate issuance in Australia.

The Inter-American Development Bank (AAA/Aaa) (IADB) priced its new five-year maturity Kangaroo deal on May 15, with the spread of the transaction – 70 basis points over swap – offering the first sign of tightening in the newly-rejuvenated Kangaroo market.

In the wake of provision in the Australian federal budget for the resumption of index-linked commonwealth government security (CGS) issuance, the Australian Office of Financial Management (AOFM) announced on May 13 that it is set to commence a consultancy period to determine whether and how to revive the market.

The Australian federal budget, announced on May 12, has confirmed expectations of a borrowing requirement of A$60 billion (US$45.75 billion) for the 2009-10 financial year, some of which may be funded by renewed issuance of commonwealth inflation-linked bonds.

The Kangaroo market got another boost on May 12 as the European Investment Bank (AAA/Aaa/AAA) (EIB) was able to price A$750 million (US$569.78 million) of its new five-year line, making the issuer the first ever to pass A$10 billion of total Kangaroo issuance.

The residential, mortgage-backed security (RMBS) deal priced by Members Equity Bank on May 11 was upsized to A$714 million (US$548.57 million) – an increase of A$84 million from its April 30 launch volume – with cornerstone investor the Australian Office of Financial Management taking A$500 million of the paper.

On May 8 KfW Bankengruppe (AAA/Aaa/AAA) (KfW) increased its 2012 Kangaroo bond by A$250 million (US$189.1 million), bringing total issuance in the Kangaroo market to A$1.575 billion since KfW brought the first deal of 2009 by tapping the same line on April 23.
 

The rejuvenated Kangaroo market saw its second new deal in two days on May 7 as Council of Europe Development Bank (AAA/Aaa) (CEB) priced A$300 million (US$225.6 million) of four-year bonds in a new line – the second new Kangaroo in as many days following Asian Development Bank (AAA/Aaa/AAA) (ADB)’s five year on May 6.

Watercare Services will issue a total of NZ$200 million (US$118.74 million) of five- and seven-year maturity bonds in an institutional deal on May 15. The transaction is supported by a guarantee from Auckland City Council (AA) (Auckland City) and as a result has been given a double-A rating by Standard & Poor’s.