2020-04-04 IFR Asia

(Barré) #1
year floating rate note and
a A$2bn increase to its 1.0%
February 8 2024 bond via joint
lead managers CBA, Citigroup,
UBS and Westpac. These priced
at three-month BBSW plus
39bp and EFP plus 58bp,
Domestic investors were
allocated approximately 87% of
each issue with bank balance
sheets buying 82% of the new
TCorp floater and 58% of the
fixed-rate bond tap.
also returned to the public
market last week with its
third one-year Aonia-linked
floating-rate note offering that
ultimately raised A$560m via
arranger and sole lead manager
“Given the recent market
dislocation, especially towards
the long end of the curve, we
took an opportunity to access
funding for 12 months in a
format we like, without adding
to the dislocation,” said Andrew
Kennedy, director for treasury
services at SAFA.
“An opportunity presented
itself following bilateral talks
to raise an initial A$250m.
We kept the deal open,
providing price certainty and
transparency, which helped

attract more interest in the
note which was increased to
A$560m to a mix of banks and
Pricing of the note at Aonia
plus 55bp is higher than the
margin for SAFA’s previous
two Aonia-linked trades, but it
is roughly inside those notes’
original swap levels, according
to Kennedy.
“On the buyside, the
investors were happy to buy
short-dated notes that offer
the same returns as traditional
BBSW-linked FRNs with less
day-to-day volatility,” he said.
SAFA raised A$250m from a
one-year FRN last December,
priced at 40bp over daily
compounded Aonia, having
printed the inaugural Aonia-
linked issue in June 2019, a
A$500m one-year floater with a
41bp margin.
Aonia is the RBA’s overnight
cash rate, which is published
daily and offers a risk-free
alternative to the domestic
Bank Bill Swap Rate (BBSW),
the conventional reference
point for Australian dollar
floating-rate notes.
SAFA also plans an open tap
of any or all of its 2022, 2024,
2026, 2028, 2030 and 2032
bond lines for an aggregate of
A$1.5bn. „

Nomura tests

blockchain note

Bonds Experimental offer pays out cafe points in lieu of


printed an experimental
two-part ¥30m (US$278,000)
short-term note, reserved for
employees, using blockchain
In a novel twist on the capital
markets concept, the coupon
takes the form of points that
can be redeemed at a cafe in
the firm’s building. According
to Nomura, this is the first
blockchain note in Japan.
The offering comprised a
¥25m “digital asset bond” and
a ¥5m “digital bond”. Both
tranches have a maturity of
three months and an annual
coupon of 0.5974%.
Subscription for the digital
asset bonds was through a
smartphone app connected to
a blockchain system developed
by BOOSTRY, a joint venture
between NRI and Nomura
The digital bond tranche was
offered via Nomura Securities.
The registry of both tranches
is being managed by the joint
venture using its blockchain
The blockchain system
enables an issuer to identify
bondholders even after the
bonds are transferred to new
buyers – potentially with
big implications in a more
conventional capital markets
An issuer can see who bought
its bonds in the primary market
in the traditional pot marketing
system, but it is impossible
to keep track of bondholders
once the bonds are sold in the
secondary market.
In NRI’s case, however, that
feature is unlikely to be tested
in the context of an in-house
three-month note. The bonds
were sold to NRI employees
and the number of participants
was limited to no more than

49 so that the offering could be
labelled a private placement.
The blockchain technology
also proves it is possible for
an issuer to pay a coupon in
other digital assets, such as
shareholder perks. Given the
ultra-low yields on offer in
the Japanese market, some
investors may prefer to be paid
in digital assets if the digital
coupon has a greater value.
Nomura said in a statement
that the digital asset bond
represents a new form
of collaboration between
marketing and finance which
helps expand the functions
of the capital markets, and
that the digital bond aims to
develop a quick fundraising
channel through new financial
services including digital
Lengthy marketing periods
have long been a source of
frustration for potential yen
issuers. However, a source
at a foreign bank in Tokyo
was sceptical that yen bond
issuance via blockchain will
take off in the near future.
“We don’t hear any strong
demand from the investor side
for blockchain bonds,” he said.
“Quick issuance can be done
already through [a traditional]
private placement.”
He said that even a foreign
issuer can arrange a private
placement of a yen bond in one
day, as opposed to the two to
four days of marketing usually
needed for a Samurai bond. „

International Financing Review Asia April 4 2020 9

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has requested a government
loan of around A$1.4bn as
part of a broader industry
support package to prepare
for a prolonged crisis. The
negotiations are ongoing
and may or may not include
conversion to equity in certain
circumstances, Australia’s
second largest carrier said in a
filing on March 31.
Virgin Australia follows the
nation’s flagship carrier Qantas
Airways, which completed a
A$1.05bn secured loan from
banks, and Air New Zealand,
which obtained a two-year
standby loan of up to NZ$900m
from the government in March.
In recent weeks gold mining
diversified manufacturing,
distribution company PRO-PAC

PACKAGING have completed
refinancings of US$300m
and A$95m respectively.
Construction materials
company BORAL said it plans to
repay its US private placements
with a syndicated loan after
earlier drawing down on
its loan for another bond
The actions by these
borrowers come amid a sharp
slump in lending so far this
year. Loan volumes in Australia
plummeted 46% year on year
to US$9.5bn in the first quarter
of 2020, the lowest quarterly
tally in a decade, according to
Refinitiv LPC data. New Zealand
also suffered a 32% year-on-
year decline in the first quarter
to US$1.86bn. Both markets
recorded no M&A loans during
the period. „

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