Year to date bond issuance

Issuance activity in the debt capital market continued at a steady pace throughout 2013. According to Bloomberg data, a total of $73.46bn was issued domestically year to date, (excluding Australian government placements), far in excess of the $64bn issued in the first three quarters of 2012. May recorded the second largest monthly issuance volume of $16.52bn still behind the $21.62bn of issuance undertaken in January (See Figure 1). With the outlook in the financial markets somewhat improved and Australian iTraxx trading as tight as 101bps, the lowest level since April 2011, June may also be a month of significant dealflow.

Figure 1

At the sector level, State and Services Authorities (SSA) and Other Financials was $1.28bn less in 1Q13 than 1Q12 with $10.25bn volume. In contrary, 2Q13 is already ahead of 2Q13 ($6.65bn versus $5.42bn). The beginning of 2013 saw a 5 per cent increase in the in the domestic issuance by SSAs compared to 2012, while issuance by Corporates decreased by the same level at the year to date (Refer to Figure 2).

Figure 2

Activity in the RMBS market remained strong year to date. Overall, 1Q13 had $5.76bn (Australian tranches only) compared to $4bn in the same period of 2012. The biggest issuers were Commonwealth Bank of Australia (Medallion Trust) with $2.53bn, Suncorp (Apollo Series) with $1.15bn and ING Direct (Idol Trust) with $1bn. Other name included: Bendigo and Adelaide Bank, Westpac, Resimac and Liberty Financial.

Australian financial institutions and corporations remained active in offshore markets. As the US continued to offer favourable opportunities a total of over $US45.69bn in public and private placement deals was recorded year to date. Due to challenging economic conditions in Europe, Euro and GBP issuance was lower with AU$8.45bn and AU$1.48bn volumes respectively year to date. Among biggest issuers were BHP Billiton, Origin Energy, CBA, ANZ and NAB (see Table 1).

Table 1

Over the past week there were four $AU denominated issues. Western Australian Treasury Corporation issued a six year deal; International Finance Corporation issued a five year dual tranche Kangaroo; the Treasury Corporation of Victoria placed a 19 year bond in the domestic market and Australia Pacific Airports launched a new 7 year deal. For full details please refer to New issues in the Wire.