NAB leads the way in US Private Placement market

Wednesday, 9 March 2011

National Australia Bank (NAB) acted as sole or joint lead agent on eight US Private Placement (USPP) transactions in 2010 and has already led two transactions in 2011 – a total of ten USPP transactions in less than a 12 month period.

Geoff Schmidt, Global Co-Head of Capital Markets Origination, said that NAB completed about half of all USPP issuance out of Australasia last year and is positioned to have an excellent 2011.

"Over 2010 NAB was involved in the pricing of US$1.9billion for Australasian issuers across the Power, Services, Gaming, Healthcare and Broadcast infrastructure sectors," he said.

NAB's largest USPP transaction was for ElectraNet, a US$350 million of Senior Secured Notes issuance. NAB was also a joint lead for US$250 million transaction for Sonic Healthcare Ltd, US$277 million for Broadcast Australia, US$160 million for Spotless, $270 million for TRUenergy and US$225 million for Tatts Group as well as others.

Looking back over 2010, Mr Schmidt said that the USPP market ended the year with record results - US$45 billion of supply across 167 transactions1 reviewed by over 100 investors.

"Australian issuance totalled US$4.4 billion in volume over 15 transactions2 and just like 2009 the majority of that came in the second half of the year. The results of 2010 speak volumes to this market's fortitude and growth potential moving forward. In 2010 we experienced a 73% increase in volumes versus 2009 where US$26 billion priced across 160 transactions3.

"In comparison to 2008 it's remarkable how aggressively the private placement market has rebounded in just two years. With only US$29.5 billion4 of volume during 2008 issuance has since increased by over 52%".

Mr Schmidt said the USPP market typically attracts issuers across various industry sectors.

"Unlike 2009, last year we saw far fewer sector limitations imposed by investors, resulting in sector diversification. Issuance in the first half of 2010 was predominantly concentrated in consumer products and power. However, over the course of the year issuance picked up significantly in the services and energy sector," he said.

Services, Energy and Utilities were the largest sectors in 2010 representing 22%, 15% and 15%, respectively. In total, Services represented US$8.5 billion of issuance, with Energy at US$6.0 billion and Utilities at US$5.8 billion. In 2009 Energy and Utilities were the two biggest sectors with volume of US$6.1 and US$4.9 billion, respectively5.

James Waddell, Director Capital Markets Origination, at NAB said that tapping the USPP market allows issuers to diversify their funding sources and meet future debt obligations.

"The interest from Australian borrowers in the USPP market is driven by the need to refinance and extend the maturities of their debt, as well as diversifying their funding sources.

"As prospective issuers become increasingly comfortable entering this market this should perpetuate even more interest as price discovery becomes more efficient and general awareness increases," Mr Waddell said.

Commenting on the outlook for 2011 in the USPP market, Mr Schmidt said that the pipeline of potential issuers in 2011 looks very promising.

"In the first month of 2011, NAB led two US Private Placement transactions. The first for UK's Places for People Homes (PfP), and the second for Australia's TRUenergy (TRU). Both PfP and TRU are repeat issuers and both have included NAB as a lead on all of their USPP transactions.

"While most USPP transactions originate from domestic issuers, issuance outside the US remains strong as the total private placement market expands this should continue to be a significant driver of growth moving forward," Mr Schmidt said.

Following the US, Australia was the largest issuer with 11%, the UK with 9% and Canada with 8%6.

For further information:


Mikeela Sinclair
M: +61 (0) 434 923 742

1 Private Placement Monitor 24th Jan 2011
2 Private Placement Data Field December 2010
3 Private Placement Monitor 2010
4 Private Placement Monitor 2010
5 Private Placement Monitor 2010
6 Private Placement Monitor 2010