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IBRD reopens Kangaroo pouch to multilaterals
2012年2月29日 / 中午12点12分 / 6 年前

IBRD reopens Kangaroo pouch to multilaterals

SYDNEY, Feb 29 (IFR) - Kangaroo issuance from SSA borrowers is slowly rising from the ashes with the International Bank of Reconstruction and Development printing its first transaction in 13 months on February 28, less than a week after the European Investment Bank’s return to the Australian dollar market. One leading syndicate manager said the IBRD’s dual-tranche A$1.05bn (US$1.131bn) deal - the largest kangaroo since last summer - is very welcome news, although he is “doubtful we will see any return to the halcyon days of 2010 and early 2011.” In fact, besides IBRD and EIB, the only other SSA to issue kangaroos this year has been market leader KfW which has raised A$1.15bn from three separate taps. This was a result of the heavily risk-off environment late last year, which also hit the kangaroo market, where SSA sales fell to just A$4.8bn between July and December from A$16.8bn in the first half of 2011. With investors skittish about investing even in triple-A credits, or demanding high premiums to do so, spreads surged. The rise and concurrent basis swap collapse curtailed supply since last summer when the deepening eurozone crisis coupled with disappointing US growth figures triggered a sustained bout of safe-haven switching. The IBRD, for instance, has focused more on the strong US dollar market for its funding requirements. Since the middle of last year, dollar issuance by the IBRD has represented around 80% of its total bond supply. Before that, in 2010 and in the first half of 2011, that figure was less than 60%. BACKDROP BETTERS, BUT NOT ALL CLEAR However, things have been improving this year. Investor appetite seems to be returning as the liquidity problems of European banks ease and the US recovery has begun to surprise on the upside. In addition, the basis swap has become compelling. The Australian/US dollar five-year basis has moved out sharply to 35bp from 15bp at the start of the year, having been as low as 6bp in September 2011. It is even wider than the 24bp printed at the beginning of 2011. The move was partly spurred by Australia’s four major banks, which are again issuing offshore in vast size with around US$10bn printed so far in 2012, mainly in covered bond format. Such a move in the basis was necessary to entice borrowers back to the Kangaroo market to offset the increased cost of swapping from Australian dollars. The higher price stems from new rules that require banks to hold more capital against derivative positions, which include the cross-currency swap contracts provided for SSAs. “The banks will pass these higher costs on to the borrowers which thereby increases the issuers’ costs of raising funds in the Kangaroo market,” the syndication manager stated. Recent changes in banking regulation had also undercut the demand for SSA bonds altogether. In March last year, the Australian Prudential and Regulation Authority excluded SSA bonds from the list of eligible level 1 and 2 liquid assets for Basel III purposes. This triggered an inevitable decline in local bank balance sheets. SSA Kangaroos are consequently the lowest-yielding and thus most expensive assets allowable in the RBA’s committed liquidity facility, where banks can use eligible securities in repurchase agreements with the central bank in return for a flat fee of 15bp. That part of the equation remains unchanged. Even though the IBRD found enough demand for its latest deal to get it done nicely, bank balance sheet demand was limited to 30% of the five-year and just 8% of the 10-year. A total of A$1.05bn (US$1.131bn) was raised from Tuesday’s dual-tranche offering. The A$700m five-year priced at 99.75bp over governments, equivalent to 23bp over asset swaps, while the A$350m 10-year came at 99bp and 33bp over.

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