Amount: A$100m
Maturity: December 5, 2005
Issue price: 100.265
Coupon: 4.75%
Launched: Tuesday November 5
Lead mgr: TD Securities
Bookrunner's comment:
The deal was launched as a follow up to the borrower's four year transaction, which we issued on September 30, and which was paid on October 31.
The name works well in retail dollar currencies; the borrower also issues frequently in Canadian dollars.
This is a semi-state credit and has already attracted good demand from continental Europe, Switzerland and Asia.
Investors want short-dated paper and after having launched a four-year deal, three years was where there was space for a new transaction.
There is scope for similar issuance in Australian dollars and other non-core currencies because there are strong redemptions due before the end of the year.
Market appraisal:
"...we haven't sold a single bond from this transaction. This is a mainly retail targeted transaction and most of these investors are waiting for redemption flows before making any decisions.
The name is not very exciting, but it is a safe bet and therefore works in the current environment.
We now need to wait and see whether investors reinvest in the redemptions."
"...this borrower comes to the market frequently, but we have not seen much issuance in the Australian dollars for a couple of weeks. We needed some paper for our network and decided to participate in this transaction."
As with deals in euros and US dollars at present, the coupon is fairly low - but this is not so important for Australian dollars.
Investors are more concerned about putting their money into triple-A rated paper, than whether the coupon is below 5%."
"...this is a good name and should go well, in particular because this is the first primary market Australian dollar deal for about four weeks.
This came at 8.5bp-9bp over the curve, and so it looks fine, but it is a bit expensive. It will be sold to investors that are seeking quality paper. The coupon is below 5%, which is unfortunate - but unavoidable when interest rates are so low.
There is nothing maturing in November, but there are a lot of redemptions in December. This has an early December payment date, and so this transaction will tap into the first part of these flows."
