Maturity: 25 August 2009
Issue price: 100.8050
Launch date: Wednesday 16 August
Payment date: 25 August
Lead mgr: RBC CM
There has not been much Australian dollar Eurobond issuance in recent months: GECC was in the market in June, and the trade before that was in April.
While alternative dollars have not suddenly become more attractive, we are entering a period of heavy redemptions in both Aussie Eurobonds and Uridashis: A$900m in September, A$1.8bn in October and A$4.5bn in November.
Over the previous three months, the figure was A$2.5bn, so if there is a pick-up in issuance, it will be in the next quarter. Even if 20% or 30% of the money already committed to Aussie dollar instruments is reinvested in the currency, a lot of new issues will be necessary to accommodate that appetite.
There was a dramatic sell-off in May and June, but spreads have widened against the US dollar and expectations of an interest rate rise are supporting the Australian dollar: it has risen by 5% against the US dollar in the past month.
With that background, I would not be surprised to see a lot of momentum trades, selling to investors keen to reinvest or extend their duration in the currency.
Swiss institutions drove the deal, which is 60% sold; the rest will go as Swiss and Benelux retail accounts get on board.