All talk, but what talk in Australia debt market
It was more about talk than action in domestic credit markets last week. The action was limited to just four small issues in the domestic corporate bond markets.In New Zealand, ASB Bank (rated AA-) launched a minimum NZ$100 million, 5.5 year bond issue mid-week, and priced a NZ$350 million issue on Friday. Pricing was indicated at around 110 basis points over mid-swaps and stayed at that level. Back in Australia, Korea Development Bank (AA-) raised A$300 million for three years on Friday. The FRNs were priced at 103 bps over bank bills. KDB has A$400 million of bonds maturing in December.The Australian branch of Rabobank (A+) added A$50 million to the May 2026 line that it opened less than two weeks earlier. The increase, priced at 132 bps over swap, takes the total outstanding to A$150 million.NEXTDC Limited (not rated) was the third - but possibly most colourful - issuer of the week. NEXTDC is an ASX listed information technology company that NAB brought to the market in June last year, to sell A$60 million of five year bonds, yielding eight per cent per annum. It is one of the few issues of its type that has not been originated by FIIG Securities.That bond issue was intended to diversify NEXTDC's sources of debt funding. The issue, which was launched at A$30 million, was clearly successful and encouraged the company to return to the market seeking a minimum of A$70 million last week. NAB was again the originator of the issue that saw A$100 million of bonds sold with a yield of seven per cent. The bonds have the same June 2019 maturity date as the original issue, and the proceeds will be used to fund the development of a new data centre in Brisbane.The big news of the week also came from the information technology sector. Intel Corporation (A+), the US technology giant, had telephone hook-ups with domestic investors to assess the potential of a domestic bond issue.No doubt encouraged by the success of Apple Inc's recent A$2.25 billion issue in August (the largest ever from a non-financial corporate), Intel may also have the same motivation as Apple for undertaking an issue. It reportedly has US$10 billion held outside of the United States that it is unable to repatriate for tax reasons. This may not be a great incentive for investors to buy any bonds issued but it will certainly add to the diversity of the domestic market if an issue eventuates. Such an issue will also provide confirmation of the domestic market's coming of age as a reliable source of long term debt funding in significant volume for corporate issuers.The success of Apple must have also come to the attention of Ford Motor Credit Company LLC (BBB-), as it too spoke to domestic investors on Thursday. In this case, Ford is considering a global note issue denominated in Australian dollars.Ford Credit Australia was a mainstay of the domestic market in the early years of its development.In the structured finance