Telstra quick to meet investor demand
The stand-out deal in the debt capital markets last week was the A$1 billion private placement of prime RMBS by St George Bank. The Class A, 'AAA' rated notes were issued by Crusade Trust No.1 of 2008, while A$51 million of unrated Class B notes were retained by St George.
The notes are supported by a revolving pool of mortgages, which, unusually, suggests that no amortisation will take place, but with the final maturity (and pricing) not being disclosed it is hard to tell. However, if this assumption is correct, the obvious buyer for the Class A notes is another bank, which can then use the RMBS for repo transactions with the RBA.
Except in times of stress, RMBS used for repo transactions with the RBA cannot be originated by the bank concerned, so this may rule out Westpac as the buyer. Since becoming eligible for repos in October last year, the use of RMBS has been slow to take off, but since April volumes have averaged almost A$50 million per day with a weighted average term of around 22 days.
In its media release to announce the issue, St George noted that its term wholesale funding program for fiscal 2009 of up to A$12 billion was now 40 per cent complete. Moreover, St George said it does not see any need to raise substantial new term funding in the near future. This could well be the last wholesale debt issue that the market sees from St George.
After a successful bookbuild, the ANZ set the margin that will be applied to determine the coupon paid on its new converting preference share at 250 basis points. This came in at the lower end of the range that was set at 250 bps to 290 bps and, not surprisingly, the issue size was increased to A$1 billion from the minimum A$500 million at launch. The offer will close on September 24 and the CPS are expected to be issued on September 30.
Across the Tasman, the CBA's New Zealand subsidiary, ASB Bank, launched a minimum NZ$50 million six-year bond issue. The issue is expected to price tomorrow at 130 bps over swap.
Offshore, ANZ raised A$125 million for two years at a reported 160 bps over CGS and US$50 million for one year with a coupon paying Libor plus 22 bps. There was also talk that ANZ would follow Westpac two weeks earlier and issue three-year FRNs and five-year fixed and floating rate notes in the Samurai market, but this failed to eventuate. Maybe it will happen this week.
Westpac also raised HK$312 million for two years. This equates to just under A$50 million.
Telstra borrowed 250 million Swiss francs over four years. Pricing on the Telstra issue was not immediately disclosed but was subsequently reported at 105 bps over the four year Swiss franc swap rate. At the same time, Deutsche Telekom raised €750 million for six years at 137 bps over mid-swaps.
The sale of term debt by Telstra and Deutsche Telekom issues confirm the demand for true corporate issuance in the Euromarket, as discussed last week. Secondly, allowing for the differences in term, credit rating (Telstra, 'A' and Deutsche Telekom, 'BBB+') and perhaps a home town advantage to Deutsche Telekom, the pricing achieved by Telstra looks quite reasonable.