Australia

The dollar market continued to sustain covered bonds on Wednesday as DNB mandated leads for a five year, a day after ANZ issued $1.25bn in the same tenor. The Australian bank got better execution than would have been achieved in euros and could have priced even tighter. The excellent result is testimony to the issuer’s long absence and to the depth of demand evident across the dollar fixed income market.

Torrid market conditions have kept issuers away from the euro benchmark market since April 29, forcing borrows to consider alternative currencies. On Tuesday, Abbey printed a £500m three year sterling deal, and even though the deal was not subscribed, bankers felt the sterling market was still open. Separately, ANZ has mandated leads for the second dollar benchmark from Australia this year.

Resimac printed a A$375m Australian non-conforming RMBS on Friday, punctuating a A$4bn plus week dominated by prime deals in the Aussie market.

Euro covered bond issuance could be poised to moderate next week, though it is still likely that one or two deals could emerge at short notice. Issuers outside Europe are less inclined to bring euro benchmarks as a change in the basis swap with dollars has reduced the difference in the cost of funding.

The return of two Australian major banks to securitization this week helped put more than A$4bn equivalent of new RMBS and auto ABS bonds on the market.

Commonwealth Bank of Australia (CBA) became the fourth non-Chinese bank to issue a Basel III tier two bond in the offshore renminbi (CNH) market. Although it wasn't able to tighten guidance, the Australian bank took advantage of favourable renminbi-dollar swap rates and managed to save cost.

Australian financial institutions are facing a much brighter future in China, after a free trade agreement opened up the possibility of easier access to the country's banking system. But for now the main opportunities are still going to lie offshore — and, in particular, with the mouth-watering possibilities of the offshore renminbi market. Matthew Thomas reports.

Fitch expects Australian borrowers to reduce their issuance of covered bonds by A$1.5bn to about A$16.5bn (€11.7bn) this year compared to last. Assuming just over half of this is conducted in euros, as was the case in 2014, the agency’s forecast is broadly in line with the average estimated by five covered bond analysts in December.

National Australia Bank issued its first euro benchmark covered bond of the year, and by choosing a maturity that would offer investors a relatively attractive yield, the issuer ensured a strong reception.

NAB has mandated joint leads for the second euro denominated Australian covered bond of the year. A long dated transaction is envisaged and books are expected to open on Thursday.

Bank of China Sydney (BoC Sydney) inaugurated RMB clearing services on February 9 after being appointed to the role in November 2014 by the People’s Bank of China (PBoC).

Macquarie Securitization Limited celebrated Australia Day on Monday by launching a roadshow for what may be the first Australian RMBS to be priced in 2015, well over a month since the last supply from the country.