Top 250 2005 - Uridashi for grand finale
After issuing publicly and privately in 11 currencies across Asia-Pacific, Europe and US, the Australia and New Zealand Banking Group plans to cap a big funding year by tapping the Japanese uridashi market for the first time, as Shankar Ramakrishnan reports.
Australia and New Zealand Banking Group's (ANZ)’s uridashi, expected between now and the beginning of its new fiscal-year starting in October, could help the bank meet a targeted A$18bn–A$20bn borrowing requirement for the year ending September 30. ANZ has already met 85% of this requirement and the balance is expected to be raised through private placements and the uridashi – if the bank decides to go ahead with the issue.
“There are not many markets we haven’t accessed so far,” stressed Mark Anwender, ANZ’s senior manager, strategic funding. “We have raised funds in almost all major currencies and met our objectives of funding and investor diversification.
”We haven't tapped the uridashi market previously because we did not have the documentation in place for such an issuance, but now we are working towards it – and in the near future we could tap that market."
Anwender emphasised the rationale of uridashis being driven by value and the yield differential between the Australian dollar and US dollar yields, so any issuance – and timing thereof – will clearly be dependent upon prevailing relative value and market conditions.
Uridashi documentation also allows ANZ the option to access the Samurai market, and if that option is exercised it will also be the first such issuance for the Aussie bank major. Securitisation is another option but currently there are no definitive plans.
“Basically, we are willing to consider all markets. Our aim is to raise up to 70% of total funding needs from public markets and the balance from private placements,” said Anwender. Though the requirements are only expected to be set out in August, based on the maturity profile and potential asset growth, the bank could be looking to raise up to A$18bn in the new fiscal-year.
A large portion of the public market fundraising is expected to be executed in the Australian debt capital markets while the majority of the private placements could be done in Hong Kong, a traditional source of such funding.
“We are happy with the access to the Australian dollar market, and it is nice to see strong offshore participation in that market. Given that we are an Australian bank, we like issuing domestically and would like to see the market develop further to incorporate more investors from Asia and Europe,” added the borrower.
ANZ also enjoyed excellent name recognition in Hong Kong and, “We have no reluctance to do more transactions in Hong Kong.”
Investor confidence in the name in all the markets tapped by ANZ – and a unique funding strategy – is expected to ensure the bank continues to easily meet its funding requirements in the new fiscal-year.
“We pursue a vastly different strategy to the other majors,” said Anwender. “The focus is on fixed-rate issuance because we feel it gives us access to asset managers or real-money accounts and retail investors that traditionally seek fixed-rate notes.”
Such a focus has benefits. ANZ was the first to open up the euro currency bond markets for Australian issuers when it conducted a fixed-rate note issuance in 2000. It also did the first jumbo bond issue in Australian dollars (among bank majors) and pushed the limits of the Australian debt capital markets. “We have significantly more A$ paper outstanding than any of the other Australian majors. That indicates that the strategy is sound.”
Anwender also attributed ANZ’s successful issuances in Asia, Europe and the US markets to the commitment shown by the bank to investors through regular updates that sustained their belief in the bank’s credit fundamentals.
“Talk about pedigree and ANZ is right there at the top. Since the 1990s ANZ has been visiting investors in Europe, and without fail, every year since 2000 to update them about the bank. It is this consistency and continuity that is liked by investors,” he claimed.
“In any case, we have a good story to sell. We have had a stable management team (the CEO has been with the bank since 1997) and key financial indicators, such as our cost-to-income ratio (as of half-year ended March 31) at 45.8% being the lowest among all the other majors, which have all contributed to our success.”