Citi, Rentenbank and EIB end a busy quarter

Domestic corporate bond issuance stood at A$31.6 billion at the end of the first quarter of 2010, compared with A$24.2 billion at the same time last year. This is surprisingly well ahead, given that the domestic banks were not expected to be significant issuers this year, and that so far they haven't been.

But their absence has been more than made up for by kangaroo issuance, by supranationals and agencies in the main, and issuance by the local operations of international banks. A highlight of the quarter, though, was the market debut of HSBC Bank Plc and the return of JP Morgan Chase.

Kangaroo issuance totalled A$16.2 billion at the end of the quarter compared with A$0 at the same time last year. The difference is due to an accommodating basis swap and investor demand.

Issuance by the local operations of international banks totalled A$10.4 billion (of which A$4.3 billion was guaranteed by the Commonwealth government). This compares with only A$2.9 billion in 2009.

Last week, Citigroup Australia became the last issuer to avail itself of a government guarantee. It privately placed A$500 million of three-year FRNS at a spread of 30 basis points over bank bills.

Rentenbank became the last kangaroo issuer for the quarter, opening a new April 2017 line at A$250 million. The bonds priced on Wednesday at 91 bps over CGS and 56 bps over swap.

This left European Investment Bank to finish the week and become the first kangaroo issuer of the second quarter, with a A$500 million addition to its August 2019 line. This was the fourth addition made to the line since it was opened at the end of July last year and takes outstandings to A$2.6 billion. The top-up was priced at 78 bps over Commonwealth government bonds and 42 bps over swap.