Plenty of corporate bonds to refinance

With the massive volume of issuance seen from the banks in the domestic market and now, with the apparent thawing in the market that is seeing issues from kangaroos and corporates welcomed, 2009 could prove to be a record year. To the end of April issuance was already $13.1 billion ahead of maturities totalling $14.4 billion.

Whether this was anticipating the maturities coming or in spite of them remains to be seen.

Corporate bond maturities coming up in September total $10.9 billion - this is the largest volume of maturities in a month yet. The next record breaking month will be June 2011, with maturities already at $12.6 billion.

Details on the structure of the next AOFM-backed RMBS issue came out on Friday, when Fitch released its ratings on the RESIMAC Premier Series 2009-1 issue. The issue will consist of: $20 million Class A1 notes rated 'F1+'; $455 million of Class A2 notes rated 'AAA'; $301 million of Class A3 notes rated 'AAA'; $10 million of Class AB notes rated 'AAA'; $9.6 million of Class B1 notes rated 'AA'; and $4 million of Class B2 notes rated 'AA-'.

Offshore, Rabobank Australia undertook another $50 million top-up of its February 2012 EMTN to take outstandings to $425 million.

Finally, New Zealand's Watercare Services (rated 'A-') sold NZ$200 million of bonds guaranteed by Auckland City Council (rated 'AA') in three tranches: NZ$130 million, priced at 200 bps over swap for five years; NZ$40 million, priced at 200 bps over bank bills for five years; and NZ$30 million, priced at 205 bps over swap for seven years.

With Auckland City Council's credit rating under a cloud (refer last week's commentary) the credit margins applied to the bonds are subject to a steep ratings grid. A downgrade to 'A+' will add 50 bps, 'A' 75 bps and 'A-' 100 bps.