May issuance drought may take debt market back to September 2008

The corporate bond issuance drought continued in the domestic market with May now looking set to become the first month of no issuance since September 2008. However, nervousness in the corporate sector did not extend to the structured finance sector with two deals being priced.

FirstMac last week finally priced the refinancing of its FirstMac Bond Series 1C -2006 Trust, prime low-doc, RMBS issue, which was launched just after Easter. The delay in pricing was said to be due to a re-sizing of the underlying mortgage pool to A$339 million from A$350 million.

The issue comprised four tranches: A$293 million of 'AAA' rated Class A notes with a WAL of 2.4 years; A$36 million of 'AAA' rated Class B notes with a WAL of 5 years; A$9 million of 'AA-' rated Class C notes with a WAL of 5 years; and A$1 million of unrated Class D notes.

The Class A tranche priced at the high end of the indicative range of 140 basis points to 145 bps, with the higher-than-usual margin being due to low-doc mortgages making up around 16 per cent of the underlying mortgage pool. The Class B tranche priced at 190 bps over bank bills.

Investec Bank (Australia) priced its A$241 million, auto and equipment receivables ABS issue, via Impala Series No.1 2010-1, launched two weeks earlier.

The issue comprised six tranches: A$221 million of Class A, 'AAA' rated notes with a weighted average life of 1.8 years; A$4 million of Class B, 'AA' rated notes; A$4 million of Class C, 'A' rated notes; A$4 million of Class D, 'BBB' rated notes; A$1 million of Class E, 'BB' rated notes; and A$7 million of unrated Class F notes.
The Class B to E notes have a WAL of 2.6 years and the WAL for the Class F notes is 3.7 years.

Again, pricing came in at the high end of the indicative range for the Class A notes, at 165 bps. The Class B notes priced at 220 bps over bank bills.

Finally, NSW Treasury Corporation added A$200 million to its November 2025 CIB line, taking outstandings to A$1.8 billion. The bonds were priced at a weighted average real yield of 3.41 per cent.