COUNTRY REPORT
Australia 18 China 20 Hong Kong 28 India 30 Indonesia 31 Japan 32 Malaysia 33
New Zealand 34 Pakistan 34 Singapore 34 South Korea 36 Taiwan 37 Thailand 38AUSTRALIA
DEBT CAPITAL MARKETS
› TIGHT PRICING ON BRAMBLE EUROBOND
BRAMBLES , rated Baa1/BBB+ (Moody’s/S&P),
capitalised on a constructive European
corporate bond market to draw bumper
interest of €3.9bn (US$4.6bn) for last
Tuesday’s €500m no-grow 10-year offering.
Such strong demand enabled joint
bookrunners BNP Paribas , HSBC and JP
Morgan to price the 1.5% October 4 2027s
20bp inside 90bp area initial thoughts at
mid-swaps plus 70bp.
Some bankers saw fair value for the
Australian supply-chain logistics company
at around 70bp, based on its 2.375% June
2024s, but one investor said that was not
the most accurate benchmark because it
was largely illiquid.
“Goodman, with the same rating and
[from the same] country, came last week
with an eight-year bond at mid-swaps plus
78bp and is trading around reoffer. So, I
would put fair value closer to 80bp–85bp,”
said one investor early in the marketing
process.› BOM MAKES KANGAROO BOWBANK OF MONTREAL (A1/A+/AA–) raised A$800m
(US$636m) from last Thursday’s inaugural
offering of dual-tranche Kangaroo bonds.
It priced the A$500m floating-rate notes
inside the 95bp area guidance at three-
month BBSW plus 92bp and the A$300m
3.25% October 6 2022s at 99.327 to yield
3.3975%, 92bp wide of asset swaps.
Pricing matched the 92bp spread for the
debut repo-eligible A$1bn five-year MTNs
of Bank of Nova Scotia, Australia branch
(A1/A+/AA–), issued on September 1, at 7bp
wide of the current 85bp clearing rate for
Aa3/AA–/AA– rated Australian major bank
five-year issuance.ANZ , NAB , UBS , Westpac and the issuer’s
own syndication team were joint lead
managers.› AMP PRINTS THREE-YEAR FLOATERSAMP BANK , rated A2/A (Moody’s/S&P), raised
A$500m from last Wednesday’s sale of
three-year senior unsecured floating-rate
notes via joint leads ANZ , CBA and UBS.
The notes, carrying a guarantee from
AMP Group Holdings, priced in line with
guidance at three-month BBSW plus 75bp.
Pricing compares with the 60bp that
Australia’s four Aa3/AA–/AA– rated major
banks would currently pay for a new three-
year, according to local syndication desks.
The Antipodean lender last visited the
Australian senior unsecured market in May
2016 to sell A$500m of five-year floaters,
priced to yield three-month BBSW plus
135bp.
In between, AMP issued A$750m of
prime RMBS (Progress 2016-1) in Septmber
last year and A$250m of 10.25 non-callCBA takes the plunge into euro Tier 2 waters
Bonds Aussie major prioritises size over price for €1bn 12-year non-call seven EurobondsCOMMONWEALTH BANK OF AUSTRALIA issued
only the third Basel III-compliant euro-
denominated Tier 2 notes from an Australian
lender with last Monday’s €1bn (US$1.19bn)
1.936% 12-year non-call seven issue.
The notes, with expected ratings of Baa1/
BBB (Moody’s/S&P), priced at mid-swaps
plus 145bp, 10bp inside initial price thoughts,
on an order book of over €1.5bn.
Demand fell short of the previous week’s
€1bn 12-year non-call seven from ING, rated
Baa2/BBB/A, which pulled in orders of €4bn
and priced at swaps plus 125bp.
Barclays , CBA , Citigroup and Deutsche
Bank were the joint bookrunners on the CBA
deal.
A banker away from the trade felt relatively
generous IPTs of swaps plus 155bp area were
due to the loss-absorption language in the
terms of the bond, but a lead manager said
such concerns had largely fallen away.
Unlike European T2 bank debt where
loss-absorption is statutory, it is contractual
for Australian banks. That was a point of
contention when CBA brought its last euro T
trade to market in April 2015, another 12-yearnon-call seven that raised €1.25bn.
National Australia Bank issued the
country’s first Basel III-compliant T2 euro
notes in November 2014 with a €750m 10-
year non-call five print.
A second banker away from the trade
pegged fair value around swaps plus 130bp,
while a lead saw it at about 140bp. CBA’s
outstanding 2027 non-call 2022s were bid
around swaps plus 122bp.
The lead manager said investors were no
longer as sensitive to the debate around the
loss-absorption language.
“The challenge with any Australian bank
deal is that a lot of European investors just
don’t consider it as it’s not part of their
mandate to look at Australian credits,” he
said. “That’s the case across the full capital
structure, but, as far as I can tell on this one,
the structure is not an issue.”
Earlier this year major Australian banks
focused on the Aussie dollar Eurobond T
market, where pricing benefits are balanced
by size constraints compared to the deep
euro arena.
On August 8, Westpac sold a A$350m(US$278m) 12-year non-call seven T
Eurobond at swaps plus 183bp whereas
Monday’s much larger CBA euro T2s
swapped back around 215bp over BBSW
(local bank bills).
A Sydney-based DCM manager said
CBA secured a good result by raising
a larger amount in the higher-yielding
subordinated market than it might have got
in the senior market where Australian bank
deals had struggled of late, notably NAB’s
underwhelming 0.625% seven-year sale of
€500m on September 11.
Last Monday’s issue was CBA’s second
foray outside the domestic market since
being hit by a money-laundering scandal.
The bank secured orders of US$5.9bn in
mid-September for a US$3bn multi-part
144A/Reg S bond issue, despite paying only a
minimal concession.
Financial intelligence body Austrac is suing
CBA for alleged widespread breaches of the
law. Besides a potential class action suit, the
bank also faces separate investigations from
two regulatory bodies.
ALICE GLEDHILL