come from there,” another ECM
banker said. The main demand
of investors is the removal of
the surcharge on FPIs.
Still, some market
participants think any
government backpedalling will
do little as overall sentiment is
currently bearish.
“The Indian markets
run on sentiment and not
fundamentals and no one
knows which factor will change
the sentiment,” a Mumbai-
based analyst said.
Both Sterling and Spandana
struggled to find institutional
or retail investors for their
deals. Sterling’s already
downsized Rs31bn IPO finally
got bids for Rs29bn. The IPO
was managed by Axis Capital,
Credit Suisse, ICICI Securities,
Deutsche Bank, IIFL Holdings, SBI
Capital, IndusInd and Yes Bank.
Unfamiliarity with the solar
engineering business was
one factor behind the muted
response.
The large secondary share
component in both IPOs did
not help as investors felt the
sales were helping the vendors
and not the company. Sterling’s
IPO comprised only secondary
shares offered by controlling
shareholders Shapoorji Pallonji
& Company and founder and
managing director Khurshed
Daruvala.
Microfinance lender
Spandana’s Rs12bn IPO had a
primary component of Rs4bn
alongside a secondary sale of
Rs8bn.
The vendors were
Kangchenjunga, a subsidiary
of Kedaara Capital, managing
director Padmaja Gangireddy,
founder Vijaya Siva Ramireddy,
Valiant Mauritius, Helion
Venture and Kedaara Capital
Alternative Investment Fund.
Axis, ICICI Securities, IIFL
Holdings and JM Financial were
the joint global coordinators
and bookrunners with IndusInd
Bank and Yes Securities.
Axis, Edelweiss, IDFC, JM
Financial and Yes Securities are the
bookrunners on Mazagon Dock,
which builds warships, frigates
and submarines.
IDBI Capital, SBI Capital and Yes
Securities are the banks on the
IRCTC IPO. World Bank adds to
baby blockchain steps
Bonds Supranational attracts two new investors for A$50m
Bondi Kangaroo tapBY JOHN WEAVERSThe WORLD BANK has added
a grand total of two new
institutions to the investor
base for its Australian dollar
blockchain bond following a
marketing effort in Australia
and Singapore.
The two investors, including
the first from outside Australia,
subscribed to a A$50m
(US$34m) tap of the 2.2%
August 28 2020 Bondi Kangaroo
note, the first – and still the
only – public offering of
blockchain bonds.
A local DCM manager sees
blockchain technology, which
allows the bond’s life cycle
and trades to be recorded on
a distributed ledger, as a long-
term solution on the processing
side of transactions by
delivering speed and efficiency
benefits. But short-term
obstacles are preventing rapid
expansion.
“Few investor systems are
set up for blockchain bonds
in Australia, while the lack of
liquidity in the now A$160m
World Bank Bondi compared
with A$1bn-plus standard
World Bank Kangaroos as well
as the GST have contained buy-
side interest,” he said.
The Bondi bond does not fully
embrace blockchain technology
because payments are still made
via the existing SWIFT system to
avoid the 10% Australian goods
and services tax (GST) on fiat-
currency-linked tokens.
Settlement for the initial
A$110m two-year sale in August
2018 was T+3 days, the same
period for the reopening which
priced on August 13 and settled
on August 16.
The addition had three
buyers, including New South
Wales Treasury Corp, which
was one of the original seven
investors last year. The names
of the two new investors werenot revealed.
The other six original
investors were Commonwealth
Bank of Australia, First State
Super, Northern Trust, QBE,
South Australian Government
Financing Authority and
Treasury Corporation of Victoria.
One of these said he does not
expect the blockchain model to
take off until the GST question
is resolved.
“At the moment investors
suffer operational risk because
the bond is registered through
blockchain but transfers are
made outside. Until we have
end-to-end operational efficiency
then I do not anticipate a rush
of replica issues here.”
The tap, via joint lead
managers CBA, RBC Capital
Markets and TD Securities, priced
at 101.318 for a yield of 0.915%,
equivalent to asset swaps plus
18bp.
The trading functionality of
the Bondi bond was developed
by CBA in conjunction with the
World Bank and market-maker
TD Securities.
Despite modest investor
participation and the absence
of copy-cat issuance, progress is
being made, albeit slowly, with
the World Bank and CBA able
to announce in May that they
had enabled secondary trading
recorded on blockchain for the
bond.
Blockchain advocates
emphasise the technology’s
potential to deliver substantial
savings as intermediary
activities – including clearing
and the use of depository
institutions – are eventually
simplified or removed.
The bonds are seen providing
back-end rather than front-end
efficiencies with enhanced
transparency cited as one key
advantage, because the shared
ledger enables issuers to see all
current holders of the bond and
transactions. For daily news stories
visit http://www.ifrasia.comQueensland had the third
highest state arrears at 1.91%,
behind Western Australia on
3.05% and Northern Territory’s
2.90%.
Australia remains a very long
way from a housing crisis that
could impact on RMBS credit
quality.
“It will take a very
severe recession, surging
unemployment, declining
house prices and multiple
mortgagee-in-possession
sales which crystallised a loss
on sales of the underlying
properties to impact the most
junior subordinated tranches,”
explained one syndication
manager.
SUBORDINATED DEMAND
Unlike the REDS senior note,
the much smaller mezzanine
and junior tranches (which
represent just 8% of the total
issue size) all printed tighter
than their guidance ranges.
The A$27.4m Class AB,
A$18m Class B, A$14.6m Class
C, A$8.5m Class D, A$5m Class
E and A$6.5m Class F notes, all
with 6.4-year WALs, priced at
one-month BBSW plus 160bp,
180bp, 245bp, 305bp, 450bp
and 580bp.
This compared with initial
respective price talk of 170bp–
175bp area, 190bp–195bp
area, 255bp–260bp area,
315bp–320bp area, 460bp area
and 590bp area, as each note
priced 20bp to 30bp inside the
equivalent Torrens tranches.
Respective credit support for
the REDS Class A to E notes is
8%, 5.26%, 3.46%, 2%, 1.15% and
0.65%.
ANZ, Macquarie, NAB and
Westpac were joint lead
managers for the Class A notes
while NAB was sole lead for the
other notes.
BOQ previously accessed
the RMBS market in May last
year with another A$1bn issue,
through Series 2018-1 REDS
Trust.