Canadians Return to Kangaroo Bonds as Manitoba Prices Debut

Province of Manitoba sold A$200 million ($207 million) of Kangaroo bonds, the first offering in Australia from a Canadian borrower in a year.

The 4.25 percent 10-year notes were priced to yield 160.5 basis points more than similar-maturity government debt, according to an e-mailed statement from TD Securities Inc., which managed the province’s debut Kangaroo sale with National Australia Bank Ltd. (NAB) Export Development Canada, the nation’s export financing agency, is also planning to sell at least A$300 million of five-year debt, according to a statement from Citigroup Inc., one of the banks helping to manage the offering.

Sales of Kangaroo bonds, or Australian dollar-denominated notes sold by foreign issuers in the South Pacific nation, almost doubled from June to a four-month high of A$3.35 billion this month, according to data compiled by Bloomberg. Yields on bonds issued by government-backed borrowers in the Australian currency fell to a record-low 3.49 percent on July 23, according to Bank of America Merrill Lynch index data that goes back to 1999.

Canadian Imperial Bank of Commerce sold A$600 million of 5.25 percent January 2015 securities in July 2011, the last Kangaroo bond sale by a borrower from the nation before Manitoba’s offering, according to data compiled by Bloomberg.

Other Canadian provinces that have issued Kangaroo bonds include Manitoba’s eastern neighbors Ontario and Quebec, the data show. The Province of Quebec sold a A$225 million 10-year bond last year that is trading at 192 basis points over similar maturity government notes, Bloomberg prices show.

Manitoba, whose economy consists primarily of manufacturing, mining, agriculture, and forestry, is rated AA by Standard & Poor’s and Aa1 by Moody’s Investors Service, according to data compiled by Bloomberg. Quebec is ranked one level lower by Moody’s, and two by S&P.

To contact the reporter on this story: Tanya Angerer in Singapore at tangerer@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net

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