Westpac's RMBS issue sets positive tone for 2010

In the last full week before the end of the year, issuance in the domestic market was limited to Stockland Group's bond issue and buyback and Westpac's mammoth return to the RMBS market. Apart from this there were also a couple of discrete private placements.

Stockland has lengthened its debt maturity profile by issuing $300 million of February 2015 bonds, at a margin of 270 basis points to swap, and at the same time buying back $175 million of its June 2011 line at a margin of 190 bps over. This leaves $275 million of the June 2011 line outstanding.

Strong investor demand allowed Westpac to double the size of its Series 2009-1 WST Trust RMBS issue to $2.0 billion. Pricing was only disclosed on the $1.84 billion of Class A notes, which was in line with indications at 130 basis points over bank bills. Pricing on the $110 million Class AB tranches and the $50 million Class B tranche was not disclosed.

This is the largest RMBS issue undertaken this year and sets a very positive tone for 2010.

While all this was going on, AMP Bank issued $100 million of three-year floating rate notes and $50 million of 18 month FRNs. The government-guaranteed issues were priced at 40 bps and 30 bps over bank bills, respectively.

The CBA also quietly placed $100 million of five-year, government-guaranteed, FRNs at 28 bps over bank bills. A small private placement is nothing to get excited about, but at an all-up margin of 98 bps over for five years is much better than some of the recent pricing seen on offshore issues by the big four banks, though it is in line with the 100 bps over Westpac paid for a $1.1 billion domestic bond issue in November.