A$ billion Debt Markets Week in Review Friday, 5 July 213 Debt Capital Markets Key events of the past week The retail hybrid market continues to perform strongly with ANZ launching Australia s first retail debt offering for the financial year in a new Basel III compliant tier one hybrid (CBA acting as Joint Lead Manager and Bookrunner). This follows similar transactions by Westpac, NAB and Macquarie Group earlier this calendar year (CBA acted as Joint Lead Manager and Bookrunner on each of these transactions). The ANZ Capital Notes offer is seeking to raise approximately A$75m at an expected margin of 6m BBSW+34-36 bps, to be determined via a bookbuild with the final margin to be announced on Tuesday, 9th July. Domestically, the RBA left the cash rate unchanged at 2.75% on Tuesday in line with market expectations. The QII CPI data is widely considered to be a key determinant of the RBA s actions in August. Economic data was mixed this week, with residential building approvals falling by 1.1% in May and retail trade growing by.1% in May (market consensus:.3%). The May trade balance beat market expectations, with a trade surplus increase ($.7bn) in May due to a 3.6% increase in exports. Offshore, concerns over the strength of the Portuguese government have reignited fears of a Eurozone collapse. Market focus has also returned to the Greek debt crisis as the latest review of Greece s assistance program is underway. US economic news released Friday shows an increase in non-farm payrolls of 195k in June (market consensus: 165k), with the unemployment rate unchanged at 7.6%. The week ahead Domestically, there will be a number of key economic data releases this week. Consumer and business sentiment updates and June employment figures will be released on Wednesday and Thursday respectively with housing lending data closing the week on Friday. Offshore, the economic releases of note will be Chinese June CPI growth figures on Tuesday and the FOMC June meeting minutes on Thursday. Australian credit market conditions Credit spreads are largely unchanged this week, with the Australian generic 5 year itraxx closing the week at 138bps. Australian 3Y and 1Y bond yields have ended the week broadly unchanged since last week with 3Y and 1Y bond futures closing the week at 97.14 and 96.15 respectively. A$ MTN primary issuance update Rating Issuer Format Issuer Issue Maturity Amount Coupon Spread to benchmark No new issuance this week 213 primary issuance table Sector 213 year to date 212 year to date Comparison SSA A$1.3b A$13.21b -A$3.18b Domestic Banks A$14.14b A$24.95b -A$1.81b Foreign Bank/Branches A$7.87b A$7.54b +A$.33b Non-Bank Financial A$2.49b A$1.64b +A$2.85b Corporate A$2.9b A$3.2b -A$.27b Semi Government A$14.51b A$5.98b +A$8.53b Total A$51.93b A$56.51b -A$8b Source: CBA and Bloomberg Retail and Hybrid Market ANZ launched a A$75 million tier one hybrid transaction (see above). Hybrid Secondary Trading Margins Weekly Average Security Maturity/ Call Date Issue Margin Trading Margin CTXHA Sep-17 4.5% 3.496% AQHHA Mar-18 4.5% 3.241% CWNHA Sep-18 5.% 4.144% WBCPC Mar-18 3.25% 3.565% ANZPC Sep-17 3.1% 3.517% SUNPD Nov-18 2.85% 2.933% CBAPC, WBCPD, Dec-18, Mar- 3.8%, 3.2%, NABPA (Avg) 19, Mar-19 3.2% 3.139% NABHB, ANZHA, Jun-17, Jun-17, WBCHA (Avg) Aug-17 2.75% 2.328% A$ Hybrid Market Primary Issuance 14. 12. 1. 8. 6. 4. 2.. CY5 CY6 CY7 CY8 CY9 CY1 CY11 CY12 CY13 Non-financials Financials Contacts Global Debt Markets Debt Capital Markets Syndicated Loan Markets Asian Syndicated Loan Markets Simon Ling +612 9118 6463 Rob Kenna +612 9118 1219 Loretta Venton +613 9675 7389 Ninghong Xie +852 934 489 European & US Debt Capital Markets NZ Debt Capital Markets European Syndicated Loan Markets Debt Markets Securitisation Jan Keller +44 2 7713626 Simon Rutz +64 9 337 4924 Andrew Powderly +44 2 7713984 Rob Verlander +612 9118 1228
Margin %p.a. Margin %p.a. US$ (Billions) Debt Markets Week in Review Friday, 5 July 213 \Loan Markets The Loan Markets & Syndications team would be pleased to provide clients any updates on the Syndicated Loan Markets. For copies of the LMU 1H213, please contact Dzung Tran or Grazia Zappia (Dzung.Tran@cba.com,au & Grazia.Zappia@cba.com.au). AU/NZ Monthly Loan Volume 3 25 2 15 1 5 212 213 Jan Feb Mar Apr May Jun* Jul Aug Sep Oct Nov Dec 3 Year Indicative Pricing Spread 5 Year Indicative Pricing Spread 3. 3. 2. 1.5 1. Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 A- BBB+ BBB BBB- 2. 1.5 1. Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 A- BBB+ BBB BBB- Securitisation Fitch has released its half yearly report "Australian Mortgage Delinquency by Postcode -31 March 213". Delinquency rates across Australia have increased to 1.45% from 1.2% at the end of September 212, but remains below the five year average of 1.53%. Increased arrears, particularly in low income/high unemployment regions, indicate RBA s decision to reduce the cash rate did not positively impact mortgage performance in the six months to March 213. Australian Securitisation Issuance Summary Domestic and Offshore YTD Type 212 212 YTD 213 YTD Comparison RMBS Prime $12.47b $4.1b $1.64b + $6.54b RMBS Non-conforming $.9b $.6b $1.5b + $.45b ABS $5.12b $1.81b $b + $.69b CMBS - - -.25b +.25b Total Securitisation Issuance $18.49b $6.51b $14.43b + $7.93b Australian Securitisation Primary Pricing Summary b Prime RMBS ABS Non Conforming RMBS CMBS 25 2 15 1 5 - Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Contacts Global Debt Markets Debt Capital Markets Syndicated Loan Markets Asian Syndicated Loan Markets Simon Ling +612 9118 6463 Rob Kenna +612 9118 1219 Loretta Venton +613 9675 7389 Ninghong Xie +852 934 489 European & US Debt Capital Markets NZ Debt Capital Markets European Syndicated Loan Markets Debt Markets Securitisation Jan Keller +44 2 7713626 Simon Rutz +64 9 337 4924 Andrew Powderly +44 2 7713984 Rob Verlander +612 9118 1228
Swap rate % Basis Swap (bps) Premium (bps) VIX (%) Spread (bps) A$ billion A$ billion Debt Capital Markets Market Data 12 1 8 6 4 2 Domestic Corporate & Bank A$ MTN Issuance Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Non-Bank Financial Corporate Bank (Non-GG) 15 1 1 7.5 5 Monthly A$ Maturities Jul-13 Aug-13 Sep-13 All Other Corporate Market Trends itraxx and Volatility 2 6% 16 4% 12 2% 8 % Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 itraxx VIX Major Bank 5 Year CDS 135 125 115 15 95 85 75 Fri, 7 Jun 13 Fri, 21 Jun 13 Fri, 5 Jul 13 Major Bank Average Senior CDS Swap Rates Australian Swap Rates 5.5 4.5 3.5 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 5 Year Swap 1 Year Swap Australian Basis Swap 4 3 2 1 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 5 year 1 year Key Rates Actual Forecasts 5 Jul-13 Sep-13 Dec-13 Mar-14 Jun-14 RBA Cash Rate 2.75% % % % % AUD/USD.91.95.96.95.95 9-day Bank Bill 2.83% 2.4% 2.4% % 2.6% 18-day Bank Bill 2.81% 2.3% 2.4% % 2.6% ACGB 3 Year 2.79% 2.7% 2.75% 2.9% 3.5% ACGB 1 Year 3.8% 3.5% 3.6% 3.7% 3.8%
Equity Capital Markets Market Update The ASX2 ended the week.8% higher as investor sentiment was boosted by the European central banks' commitment to continuing stimulus. Energy led the gains for the week, closing 3.5% higher as the turmoil in the Middle East pushed oil prices higher, whilst Staples led the losses, closing.7% lower. It was a muted week for equity capital market activity, with $112m raised via 3 transactions. GI Dynamics (ASX: GID) announced the largest deal of the week via a $58m placement to be accompanied by a $m SPP. The deal was upsized from an initial $35m, priced at $.53 per CDI, representing a 1.9% discount to last close with the proceeds raised to fund its US clinical trial for the EndoBarrier device and working capital. Bell Potter and Lazard Capital Markets acted as joint lead managers to the deal, with the latter managing the US portion of the placement. Galaxy Resources (ASX: GXY) also announced a $47m 1-for-1 non renounceable entitlement offer during the week, after being postponed from its first announcement on 27 May. The deal priced at $.8 per share, representing a 48.4% discount to TERP, with the proceeds raised to reduce debt, restructure the balance sheet and working capital. The deal was non underwritten but managed by Patersons. Block trades for FY14 kicked off with NEXTDC (ASX: NXT) selling its entire stake in Asia Pacific Data Centre Group (ASX: AJD) worth $28m. The block was conducted at $1.7 per security through RBS Morgans, representing a 5.3% discount to last close, with the proceeds used to fund the fit out of its S1 and M1 facilities. In the IPO market, insurance broker Steadfast Group has recently lodged its prospectus with an IPO book build date set for 3 July with a listing in August. The offer is expected to raise up to $522m with a price range of $1.-$1.2 per share, for a listing market capitalisation of $622m. JP Morgan and Macquarie Capital are acting as the joint lead managers to the deal. Market Data Issuance by Type ($bn) (deals over 1m) ECM issuance by size & sector ($bn) LTM 82.6 51.4 35.8 4.3 19.1 23.2 16.8 17.2 1.5 25 26 27 28 29 21 211 212 213 Top 1 (1) 11-2 (19) Ex 2 (176) Ind x Fin (85) Fin (12) Mining (68) Prop (23) O&G (17).4 1.2 1.9 3.8 3.1 3.8 7.5 1.4 Placements Entitlement offers IPOs Pricing and Volatility Equity market performance local currency LTM indexed to ASX2 5,4 5,2 5, 4,8 4,6 4,4 4,2 4, 3,8 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul ASX2 MSCI World S&P5 ASX2 3-day Volatility & VIX Index (LTM) 3% 25% 2% 15% 1% 5% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul ASX2 3d volatility VIX Index http://www.commbank.com.au/corporate/capital-raising/debt-markets 4 of 5
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