- Weather
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Max |
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40°C |
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Min |
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30°C |
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Sunrise |
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05 : 30 AM |
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Sunset |
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06 : 30 PM |
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Humidity |
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50 to 80 per cent |
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- Prayer Time
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Fajar |
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03:58 am |
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Dhuhr |
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12:09 pm |
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Asar |
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03:30 pm |
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Magrib |
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06:50 pm |
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Isha |
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08:09 pm |
- Oil Price
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- Gold Price
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Price in RO
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24ct / gm |
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17.37 |
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22ct / gm |
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17.00 |
- Currency Rates
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Forex Rates vs R01
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US Dollar |
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2.60 |
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Euro |
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2.01 |
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Pound |
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1.72 |
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Indian Rs. |
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144.42 |
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Pak Rs. |
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255.85 |
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Bangla Taka |
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201.35 |
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National Bank of Abu Dhabi priced A$300 million ($311 million) of five-year bonds to yield 5.09 per cent on February 28 and got orders for more than four times the notes offered. Emirates NBD, whose 2006 sale was the only other Middle-Eastern Kangaroo offering, is considering a return to the market. Photo – Times file photos
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Sydney: The United Arab Emirates' two biggest lenders by assets are considering issuing more debt in Australia, joining borrowers from San Francisco to Frankfurt meeting demand in the developed world's highest-yielding market.
National Bank of Abu Dhabi priced A$300 million ($311 million) of five-year bonds to yield 5.09 per cent on February 28 and got orders for more than four times the notes offered in the biggest sale in Australia by a Middle-Eastern issuer.
It will look to sell debt again in the nation, said group treasurer Stephen Jordan. Emirates NBD, whose 2006 sale was the only other Middle-Eastern Kangaroo offering, would consider a return to the market, said Patrick Clerkin, director of global funding.
Bond offerings by foreigners in Australian dollars accounted for 36 per cent of sales in the nation this year, from 20 per cent in the same period of 2012, data shows. KFW, Landwirtschaftliche Rentenbank and Wells Fargo led A$8.4 billion in issuance as the extra yield on corporate notes relative to swap rates dropped 71 basis points in the past year to 110, outpacing a 46 basis point drop to 141 in the United States, according to Bank of America Merrill Lynch indexes.
"We will certainly be looking to build on this inaugural deal over the coming years," said NBAD's Jordan in an e-mailed response to questions. "The economics of this trade allowed us to gain access to new investors in new geographies with no net new issue premium at all," he said in a separate statement following the sale.
Spreads tumbling
Australian investors accounted for 54 percent of the NBAD sale, with 41 per cent from Asia and 5 per cent from Europe. The 5 per cent March 2018 notes were priced to yield 175 basis points more than the benchmark swap rate, less than the 180 basis points they had been marketed at.
The gap plunged to 121 basis points in Sydney, according to Australia & New Zealand Banking Group. Challenger, an Australian investment management company with a balance sheet of A$10.2 billion, said it was one of the investors who encouraged NBAD to come and it would like more issuers from the six-nation Gulf Cooperation Council.
"We went over to the Middle East and toured around and saw a bunch of potential issuers and said bring a deal to Australia, you'll do really well," said Bob Sahota, head of fixed interest at the company. "They believed us and it went beautifully. Why wouldn't they be back?"
The GCC is investing its oil wealth on more than $1 trillion of projects, including roads in Saudi Arabia and stadiums for the 2022 soccer World Cup in Qatar. Relative costs for firms borrowing in Australia have fallen to the lowest level since 2007. - Bloomberg News
with the average premium over government yields dropping to 141 basis points on March 15, according to Bank of America Merrill Lynch indexes. The average spread for debt in the US was 145 basis points.
Australian government bond yields, which last week climbed to a level where they all exceeded the Reserve Bank of Australia's cash rate for the first time since 2011, fell today as an unprecedented levy on Cyprus's bank savings threatened to tip Europe back into crisis. The yield on the benchmark 10-year note dropped 15 basis points to 3.48 per cent, poised for the biggest daily decline since May. The Australian currency fell 0.5 per cent to $1.0357 in Sydney.
Australian buyers
NBAD has been looking at the Australian market for about two years, according to Jordan. While the bank could have sold debt "a considerable time ago," its aim of diversifying its funding sources meant that it wanted at least half the issue to go to Australian buyers, he said.
The Abu Dhabi-based lender carries a rating from Moody's Investors Service of Aa3, its fourth-highest investment grade, data shows. Standard & Poor's ranks it one step lower at A+.
The bank is majority owned by the Abu Dhabi government, holder of most of UAE's oil reserves, which last year forecast economic growth will accelerate to 5.7 per cent a year through 2016 from an estimated 3.9 per cent for 2012.
Emirates NBD, the UAE's largest bank by assets, 'would certainly consider revisiting' the Australian market, Clerkin said in an e-mailed response to questions. Emirates NBD is rated Baa1 at Moody's, three levels above non-investment-grade status.
The lender's Emirates Bank International unit sold A$250 million of floating and fixed three-year notes in November 2006, data shows.
Untied States banks
The Australian funding market has lured borrowers from across the world this year. Banks including Wells Fargo and Citigroup have sold Kangaroo bonds, while BNP Paribas, Industrial & Commercial Bank of China and Sumitomo Mitsui Banking Corporation are among those to issue through local branches.
"The supply you're seeing from offshore borrowers is a reflection of the fact that the basis swap is still at attractive levels," said Apoorva Tandon, a Sydney-based director in the syndicate at ANZ, which was one of the sale managers for NBAD.
The five-year Australian-dollar basis swap, which measures the cost of switching interest based on the London interbank offered rate, or Libor, for payments linked to Australia's bank bill swap rate, was at 27.5 basis points today, having averaged 14 over the past decade. The higher the level, the greater the discount for overseas borrowers.
"We'd expect heightened interest from Middle Eastern issuers on the back of the NBAD issue given the bank is the benchmark for a number of borrowers in the region, but we don't expect a flood of supply," Tandon said. "You could see some of the stronger banks from the region explore the market first."
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