Guarantor: General Electric Capital Corp
Rating: Aaa/AAA
Amount: A$100m
Maturity: July 19, 2004
Issue price: 100.875
Coupon: 6%
Launched: Monday June 21
Lead mgr: TD Securities
Bookrunner's comment:
The GE 5.5% of December 2004 transaction we launched a couple of months ago went very well and we were continuing to see steady demand for the bonds.
As we had seen such good flows in the deal we were thinking of either increasing it or launching a new issue for the same borrower. As yields had gone up and swaps had moved in our favour we decided to launch a new deal with a 6% coupon in lieu of increasing the existing bond.
There are quite a few redemptions coming up with roughly A$1.5bn maturing in July. This deal is not designed to match up with any one particular issue but settles in the middle of the heavy redemption period, making it ideally placed to absorb some of the reinvestment flows.
GE is always a good name in Switzerland and that has been the strongest area of demand. We have also sold some bonds into the Benelux and Italy.
The deal has tightened in a couple of basis points since launch.
Market appraisal:
"...investment flows in A$ are reasonably good - much better than in Canadian or Kiwi dollars - thanks to heavier redemption flows.
This issue will go but to some extent it has been overshadowed by the recent issue for Toyota which thanks to a lower market was able to achieve a higher coupon."
"...this will be overshadowed by the Toyota issue which came out later in the week with a higher coupon. But there should be room for both issues as there are a large number of redemptions coming up in June and July."
"...we participated in this deal as we had little Aussie supply on our books and needed some for redemption-driven buying.
However, demand is limited and although this was welcome at the time, the Toyota deal which came out afterwards was more attractive. This will only sell once the Toyota issue has gone."
Toyota Finance Australia Ltd
Guarantor: Toyota Motor Finance Netherlands BV
Rating: Aa1/AAA
Amount: A$100m
Maturity: July 26, 2004
Issue price: 100.72
Coupon: 6.25%
Launched: Wednesday June 23
Joint books: Deutsche, RBC DS
Bookrunner's comment:
This deal is aimed at A$ redemption money. The issue is well placed to absorb some of those flows and the payment date specifically matches the maturity of a A$200m issue.
At the moment the market is fairly quiet as redemptions haven't started to pick up yet but in July and the beginning of August there will be A$2bn of maturing funds some of which will be reinvested.
A lot of retail houses have decided to wait until those flows become reality before participating in this transaction but we have nevertheless seen good initial sales.
Toyota is a very good name which has always priced its deals in line with market expectations. As far as the pricing of this issue is concerned it came well clear of the GE transaction. This was due to the sell-off in the market and the slightly cheaper funding targets of Toyota.
Market appraisal:
"...the leads took advantage of the bearish market to trump the recent GE deal with an issue for Toyota with an eye-catching 6.25% coupon.
Both issuers have triple-A ratings so in terms of credit quality there is little to chose between them and there is no reason to pick the GE rather than Toyota. This issue will definitely sell first."
"...at a spread of 65bp over at full fees this issue looks pretty good value. It is well placed to absorb upcoming redemption flows and should outsell the GE issue. But the success of both issues hinges on the level of reinvestments."
"...a five year issue like the GE, but with a 25bp higher coupon. The yield at 6.07% is both above the 6% level - which is interesting for retail - and higher than the 5.79% yield on the GE. Given its advantages over GE, it should go well.
We see some demand for the currency because of redemption flows, but little reinvestment. Even though the coupons available are far higher than in euros, they are still lower than you can get in US dollars and the Aussie dollar is not seen as such an attractive currency as the US dollar."
World Bank
Rating: Aaa/AAA
Amount: A$500m international registered notes
Maturity: May 14, 2003
Issue/fixed re-offer price: 98.42
Coupon: 5.5%
Spread at re-offer: 25.2bp over the 9.5% 15/08/2003 Commonwealth government bond
Launched: Thursday June 24
Lead mgr: RBC DS
