Covered Kangaroo tops a busy week

Sophia Rodrigues
It was a record week for Kangaroo bonds which saw Australian-denominated covered bonds sold for the first time since the global financial crisis, and the total for all Kangaroo debt this year hit a new record.

Foreign issuers are flocking to the Australian market to take advantage of its strong appetite for debt, and this has now extended to covered bonds, which are being sought after by banks increasing the holdings of liquid assets on their books.

The Reserve Bank permits covered bonds issued by eligible foreign banks to be used as collateral for repos, even though Australian regulations do not allow banks to issue covered bonds.

Canadian Imperial Bank of Commerce sold $750 million, through 5.75 per cent 2013 covered bond at a spread of 91.25 basis points over a similar maturity government debt. The bank had originally planned to sell $500 million of the bond at an indicative spread of around 95 bps.

In other Kangaroo issues, Credit Agricole raised $900 million, selling more than twice the amount initially planned, via three-year fixed and floating rate notes.

The three-year notes were priced to yield 6.61 per cent and raised $275 million, while the floating rate notes raised $625 million at 125 basis points over a three-month bank bill swap rate.

According to Bloomberg, the issue took the total Kangaroo issuance in 2010 to a record high of over $33 billion, beating 2006 record of $32.4 billion.

In other firsts, ING Bank launched its first RMBS deal in Australia, offering $500 million via four tranches, with three of them rated AAA by Standard & Poor's.

Meanwhile, Dexus Wholesale Property Fund is meeting investors this week and the next, but doesn't have any specific debt plan in mind. The fund has a $250 million debt maturing in February 2011 and may sell bonds to refinance this.