On September 11, the 3.15% June 26
2029s were increased by A$50m, taking the
total outstanding to A$250m.
The reopening, via Nomura, priced at
100.543 for a yield of 3.09%, 42bp wide of
asset swaps and 50.75bp over the April
2029 ACGB.
Three days later IFC added A$75m to the
3.2% October 18 2027s to increase the issue
size to A$925m.
Sole lead UBS priced the tap at 101.537
for a yield of 3.005%, 41bp and 41.5bp wide
of asset swaps and the November 2027
ACGB.
STRUCTURED FINANCE
› CBA ISSUES MEDALLION RMBS
A A$1.63bn (US$1.18bn) no-grow MEDALLION
TRUST SERIES 2018-1 offering of prime
residential mortgage-backed securities
priced last Friday.
The A$1.5bn Class A notes with a
weighted-average life of 6.5 years and
8% credit support were preplaced and
pay a coupon of one-month BBSW plus
118bp.
The A$61.96m Class A2s, A$30.98m
Class Bs, A$17.94m Class Cs, A$6.53m
Class Ds, A$6.53m Class Es and A$6.53m
Class Fs, all with 9.2-year WALs, priced in
line with guidance at one-month BBSW
plus 175bp, 200bp, 260bp, 350bp, 470bp
and 685bp, respectively.
Mortgage originator Commonwealth Bank
of Australia was arranger and joint lead
manager with Deutsche Bank.› LIBERTY SETS RMBS GUIDANCEInitial price guidance has been released
for four tranches of a potential A$500m
equivalent Australian dollar and euro-
denominated LIBERTY SERIES 2018-3 RMBS due
to launch this week.
NAB is arranger and joint lead manager
with Bank of America Merrill Lynch, CBA,
Deutsche Bank and Westpac.The A1b and A1c notes will equal
A$240m-eqivalent.
For the A$85m Class A1a notes with a
0.3-year weighted-average-life price talk is
one-month BBSW plus 80bp area.
For the Australian dollar A1b notes with
a 2.4-year WAL guidance is one-month
BBSW plus 135bp-140bp area. The A1b
notes and the euro-denominated A1c
notes (also with a 2.4-year WAL) will total
A$240m-equivalent.
Price talk for the A$125m Class A2s and
A$18.5m Class Bs, both with 3.5-year WALs,
guidance is one-month BBSW plus 190bp
area and 210bp area, respectively.
The offering also includes A$9.5m Class
C, A$6m Class D, A$5.5m Class E and
A$2m Class F notes, all with 3.5-year WALs.
A$8.5m of Class G notes with a 4.1-year
WAL will be retained.
In April, the specialty finance group
issued Liberty Series 2018-1 Trust, a dual-
currency A$1.5bn-equivalent RMBS that
included a €83.4m (US$94m) Class A1c euro
tranche.Offshore trio eye Aussie debuts
Bonds One US and two UK corporate issuers market inaugural Kangaroo bondsThree overseas companies have carried out
marketing exercises in Australia and Asia for
potential debut Kangaroo bond offerings,
at least two of which could be launched as
early as this week, as cheaper pricing attracts
more foreign issuers to the Australian dollar
market.
GENERAL MOTORS FINANCIAL (Baa3/BBB/BBB),
the wholly owned captive finance subsidiary
of GM, held investor meetings last week
arranged by Deutsche Bank and Westpac.
GM Financial told participants it was
looking to print a three and/or five-year
Kangaroo, which would tie in with the typical
agreements on its car loan book.
As a result, the offering, which could be
announced in the next few days, will offer
an alternative to the seven to 10-year bonds
that have been a staple for recent overseas
corporate issuance Down Under.
THAMES WATER UTILITIES, rated Baa1
(Moody’s), held investor updates arranged
by CBA and NAB that tested the ground for
a possible inaugural Kangaroo that would
further diversify its investor base following
a C$250m (US$194m) 2.875% seven-year
Maple bond in December 2017.
Having loaded up on very long-dated debt
in the sterling market, fund managers who
spoke to Thames Water believe a seven to 10-
year offering may be on the cards.HEATHROW FUNDING, rated A–/A– (S&P/
Fitch), the funding vehicle of London’s
Heathrow airport, engaged with investors for
a potential Kangaroo offering, also via CBA
and NAB, that could be launched this week.
A Sydney-based asset manager said
Heathrow was looking to tap Asian demand
for 10-year Australian dollar assets but
suggested its pricing goals appeared
aggressive by aiming to print inside
Melbourne Airport, which has similar ratings
of A3/A- (Moody’s/S&P).
In August. Heathrow Funding issued a
C$400m 12-year Maple bond having printed
a €500m (US$580m) 15-year Eurobond in
June 2017.DIVERSIFICATION AND PRICING
In addition to obvious diversification
benefits, the elevated cross-currency basis
swap curve has made it more attractive for
foreign companies to issue in Australian
dollars and swap the proceeds back into their
home currencies.
For example, the Australian dollar/US
dollar one-year cross-currency basis swap
has climbed from 12.4bp on June 5 to 29.5bp
with smaller increases seen along the curve.
The three-year has climbed from 16.9bp
to 30bp in that time, while the five-year
and 10-year basis swaps have moved from20.8bp and 31.9bp up to 33bp and 36bp,
respectively.
On September 14, AT&T (Baa2/BBB/A–)
ended a 13-month drought of benchmark
Kangaroo issues from American companies
with a A$1.325bn (US$955m) four-tranche
offering comprising five-year, long seven-year
and 10-year tenors.
AT&T showed there was life in the US
corporate Kangaroo market in the aftermath
of last December’s US tax cuts, most
importantly on repatriated profits.
These changes removed or watered down
a key incentive for American firms to issue
bonds offshore and bring the funds raised
back home (tax free) to pay dividends and
finance share buybacks.
European companies picked up some of
the corporate Kangaroo slack during the US
hiatus, with British mobile network operator
Vodafone Group printing the biggest trade
from a non-financial European issuer in
December 2017 with a A$1.15bn sale of five-
year and 10-year bonds.
State-owned German rail operator
Deutsche Bahn raised A$956m from three-
separate Kangaroo transactions between
September 2017 and May 2018, while German
property group Aroundtown sold a debut
A$250m seven-year on May 4 this year.
JOHN WEAVERS