Latest News

Refine news

Over A$1 billion (US$724 million) of residential mortgage backed securities (RMBS) has been priced by a brace of Australian issuers in the past week, but with the Australian Office of Financial Management (AOFM) continuing to be the cornerstone investor in all transactions market participants are starting to ask for the agency to extend its buying programme beyond its current A$8 billion commitment.

Rabobank Nederland (Rabobank) is seeking indications of interest for a return to the New Zealand hybrid market, with the issuer planning to use the portfolio investment entity (PIE) structure to offer favourable tax treatment to retail investors. The PIE Capital Securities will be issued by a special purpose entity, Rabo Capital Securities, established in New Zealand as a subsidiary of Rabobank.

Lead managers on retail offerings in the Australian market in the past two months say all three deals have received strong support from retail investors, who they say are ready to look at income-generating assets offering good margins and a high yield. Investors have been offered five-year senior bonds of Tabcorp (BBB+), 10NC5 lower tier two (LT2) paper from AMP Group (AMP) (A/A2) and the mandatory convertible hybrid securities sold by Westpac Banking Corporation (Westpac) (AA/Aa1/AA-).

In a sign that domestic investors are gaining in confidence, Commonwealth Bank of Australia (CommBank) (AA/Aa1/AA) today launched its third non-guaranteed trade since the government guarantee was introduced last year. Pricing took place just 3.5 hours later and the total volume of the three-year bonds exceeded expectations - A$1.2 billion (US$859 million) was priced in fixed and floating rate notes (FRNs) at mid-swap and bank bill swap rate (BBSW) plus 130 basis points. Thirty-five investors participated in the trade.

On April 4 Bank of Queensland (BBB+/A2/BBB) priced A$712 million (US$507 million) of residential mortgage-backed securities across four tranches via its Series 2009-1 REDS Trust. The deal was upsized from A$668.7 million. This transaction indicates pricing consistency is starting to be established in the fast-pay RMBS tranches.

On April 1 joint lead managers for the A$200 million (US$137 million) five-year Tabcorp Bonds (BBB+) completed the bookbuild and set the margin at 425 basis points over the bank bill swap rate (BBSW) - the middle of the indicative range of 400-450 basis points announced last week. The leads say 15 per cent of the buyers are institutional investors, the book is fully subscribed, and they anticipate the issuer will price more than the minimum amount by the time of the May 1 issue date.

On March 27 Challenger Securitisation Management (Challenger) announced it will exercise its option to redeem all remaining Class A3, A4 and B notes in the Interstar Millennium Series (IMS) 2003-2 Trust on the May 14 2009 optional call date. And on March 30 Challenger announced it is seeking to raise a minimum of A$500 million (US$344 million) in its next residential mortgage-backed (RMBS) deal.

On March 27 Bank of New Zealand (BNZ) (AA/Aa2) priced the first New Zealand bank deal not backed by the local wholesale guarantee since November last year. The five-year bonds were sold predominantly to retail investors at a margin of 175 basis points over the five-year semi-annual mid-swap rate, and offer a coupon of 6.7 per cent.

On March 27 Wellington City Council (unrated) priced NZ$25 million (US$14 million) of five-year bonds at 215 basis points over swap and offering a coupon of 7.13 per cent. This is the third deal from a local council in 2009, bringing total volume from this sector to NZ$235 million or 12.8 per cent of the total 2009 domestic vanilla volume of NZ$1.8 billion.

On March 26 ANZ National (AA/Aa2/AA-) issued a US$1 billion 3.25 per cent deal at 150 basis points over mid-swap, guaranteed by the New Zealand sovereign. This is the first offshore government-guaranteed (GG) deal done by a New Zealand bank, and the first GG deal completed by ANZ National. 

On March 25 Australian federal treasurer, Wayne Swan, announced that the commonwealth government will implement a temporary sovereign guarantee on existing and future bonds from semi-governments. States have 28 days to take up the option to guarantee existing stock, but the treasury has yet to clarify how long the guarantee will be in place. The announcement comes after a ministerial meeting in Canberra today.

Following a busy few months the New Zealand bond market continues to be vibrant, with retail-targeted deals from corporates generally receiving strong support. This week Auckland City Council closed its five-year bond issue significantly oversubscribed, while NZ Post set the rate for its subordinated bonds at 7.5 per cent and announced that the full allocation of oversubscriptions would be issued. In addition, Vector announced it may issue NZ$150 million of five-year senior bonds.