COUNTRY REPORT
Australia 21 China 24 Hong Kong 27 India 28 Indonesia 32 Japan 32 Malaysia 34
New Zealand 35 Philippines 35 Singapore 35 South Korea 37 Taiwan 37 Vietnam 38AUSTRALIA
DEBT CAPITAL MARKETS
› CBA SEES NO SWISS PUSH-BACK
COMMONWEALTH BANK OF AUSTRALIA (Aa3/AA–/
AA–) suffered no investor push-back for
its third offshore bond offering since
becoming embroiled in a domestic money-
laundering scandal.
Australia’s biggest lender increased the
size of last Tuesday’s 8.9-year Swiss franc
Eurobond several times.
It went from an initial SFr200m (US$205m)
minimum to a SFr300m minimum and
then to a SFr400m minimum before raising
SFr450m from the 0.40% September 25 2026s,
priced in line with guidance at mid-swaps
plus 20bp.
UBS was sole lead manager on the issue,
which attracted orders of SFr450m from
52 accounts and paid a 10bp new-issue
premium over CBA’s US dollar curve.
Swiss investors bought the entire issue.
In terms of investor type, bank treasuries
took 34%, insurance companies 25.7%, asset
managers 23.6%, private banks 11.6% and
pension funds 5.1%.
Financial intelligence body Austrac is
suing CBA for alleged widespread breaches
of the law. The bank also faces separate
investigations from two regulatory bodies,
while, last Monday, law firm Maurice
Blackburn filed a class-action suit on behalf
of shareholders.
Since the scandal erupted in early
August, CBA secured orders of US$5.9bn
for September 13’s tightly priced US$3bn
multi-part 144A/Reg S bond before
issuing, 12 days later, a well-received €1bn
(US$1.19bn) 1.936% 12-year non-call seven
Basel III-compliant Tier 2 note.
The scandal is clearly seen as an equity
issue rather than a credit event at present,
though this could change if a ratings
downgrade is triggered that places CBA
below its three major bank peers.
› AOFM BREAKS TENDER RECORD
The AUSTRALIAN OFFICE OF FINANCIAL MANAGEMENT
did its largest Treasury bond tender last
Wednesday with a A$3.5bn (US$2.75bn)
2.25% November 21 2022 issue to establish
a new five-year sovereign benchmark.
The tender received bids totalling
A$12.879bn from 106 investors for a cover
ratio of 3.6797. The bid range was 2.410%–
2.455% with 26 bids successful between
2.410% and 2.420%. The weighted-average
yield is 2.4167%.
The size and frequency of Treasury bond
tenders has grown in the last 10 years as
government borrowing ballooned after
the global financial crisis, before which
Australia ran a fiscal surplus.
The AOFM usually employs the tender
system to open five-year lines, including
the previous A$2bn size record for the issue
of 1.75% November 21 2020s in April 2015,
which attracted A$6.3bn of demand.
Tenders are cheaper for the AOFM than
syndicated sales because there are no lead
manager fees to pay, while the system
often provides keener pricing as lower bids
are rejected.
Five-year tenders benefit from elevated
domestic demand around the local sweet
spot, but, even at this compelling tenor, the
AOFM took the broader syndicated market
route when it sold a jumbo A$9.3bn five-
year Treasury bond in January 2017.› AOFM EYES MODEST TAP OF 2047SThe AUSTRALIAN OFFICE OF FINANCIAL MANAGEMENT
has mandated Citigroup, Deutsche Bank and
TD Securities for a “modest” syndicated tap
of its 3.0% March 21 2047 Treasury bond,
expected to price this week.
The AOFM raised a then-record A$7.6bn
from the initial sale of the country’s longest
sovereign bond on October 12 last year,
having attracted an order book of A$13.8bn.
The overall foreign allocation was 65.2%
with 22.9% going to the UK, 19.6% to North
America, 10.0% to Europe, 6.2% to Japan,
5.3% to Asia and 1.2% to elsewhere. The
issue attracted an order book of A$13.8bn.
Fund managers took 68.9%, bank trading
desks took 12.8%, hedge funds took 10.1%,
bank treasuries took 2.8%, central banks
took 1.8% and others took 3.6%.› QUEENSLAND OPENS 2030 LINEQUEENSLAND TREASURY CORP, rated Aa1/AA+
(Moody’s/S&P), attracted broad geographical
demand for last Wednesday’s A$1.75bn
syndicated opening of its new 3.5% August
21 2030 bond line.
Australian investors bought 60% of the
issue with Japan taking 14%, Europe 12%
and Asia (non Japan) 8%, while North
American accounts picked up 6% of the
144A eligible note.Asset managers were allotted 49%,
bank balance sheets 17%, trading desks
14%, official institutions 13% and hedge
funds 7%.
The state funding authority’s latest bond
offering priced at 98.874 to yield 3.61%,
within 74bp–77bp guidance at 75bp over
10-year futures, equivalent to the April
2029 ACGB plus 68.5bp.
ANZ, Citigroup, Deutsche Bank and Westpac
were joint lead managers.› UED PRINTS A$170M SEVEN-YEAR MTNUNITED ENERGY DISTRIBUTION, rated BBB+ (S&P),
issued a A$170m seven-year medium-term
note last Thursday through joint lead
managers ANZ and NAB.
The 3.85% October 23 2024 note priced
at 99.696 for a yield of 3.85%, 10bp inside
135bp area guidance at asset swaps plus
125bp.
In September 2016, the Victorian energy
distributor issued a A$350m 3.5% seven-year
MTN.› SPARK CROSSES THE TASMANSPARK FINANCE, the borrowing arm of Spark
New Zealand (formerly Telecom New
Zealand), rated A– (S&P), raised A$150m
last Thursday from a debut Kangaroo bond
issue.
The 4.0% October 20 2027s priced at
98.964 to yield 4.1275%, 5bp inside 130bp
area guidance at asset swaps plus 125bp.
ANZ was sole bookrunner and joint lead
manager with NAB.› AUCKLAND AIRPORT ADDS TO 2027SAUCKLAND INTERNATIONAL AIRPORT, rated A–
(S&P), priced a no-grow A$110m tap of its
4.50% September 23 2027 Kangaroo bond
below revised asset swaps plus 120bp–
125bp guidance, which was reduced from
the initial 125bp–130bp talk.
Last Thursday’s increase, which lifted the
size of the issue to A$260m, was priced at
104.145 to yield 3.99%, equivalent to 118bp
over assets swaps.
CBA and Westpac were joint lead
managers on the reopening.› SSA TRIO RAISES A$1.05BNThree Triple A rated sovereigns,
surpanationals and agencies accessed
the Kangaroo market last week to raise a
combined A$1.05bn.