News

In the wake of its third-ever Kangaroo transaction, NRW.BANK says the deal is another small step in the agency’s strategic commitment to the Australian dollar market. Issuing in Australia is not without challenges, NRW.BANK acknowledges, but it expects future funding opportunities to become more plentiful as European QE is removed.

Northern Territory Treasury Corporation (NTTC) returned to the domestic syndicated market on 24 October for its second transaction in three months and its fourth in a year, before which the issuer had been absent from the market for two-and-a-half years. A change in government and the resulting need to fund capital investment, including an infrastructure programme, has driven NTTC’s return, the issuer reveals.

Hard on the heels of its dual-tranche debut Kangaroo in September, Deutsche Bahn returned to the Australian market for a 15-year transaction on 23 October. The A$150 million (US$116.7 million) deal is the longest issued for a corporate Kangaroo post-crisis, according to KangaNews data. Deal sources insist the transaction further demonstrates the ability of the Australian dollar market to print at maturities competitive with offshore markets.

Ausgrid Finance (Ausgrid)’s selection of the Australian dollar market for its first public bond deal makes sense in the context of the issuer’s likely call on this market going forward, deal sources say. The issuer says it achieved a good pricing outcome while exceeding volume expectations, supported by solid market fundamentals and good demand for infrastructure assets.

Powerco returned to the US private placement (USPP) market in September, printing a NZ$125 million (US$87.3 million) 12-year deal and New Zealand’s first-ever floating-rate USPP. Investors, rather than the issuer, assumed the basis-swap risk during the transaction, explains Stuart Marshall, treasurer at Powerco in New Plymouth.

In September, KangaNews hosted representatives of Australia’s most significant nonbank lenders at the first-ever sector roundtable discussion. On the agenda were funding markets and investor relations, the outlook for the Australian housing market and regulatory oversight of the sector.

Support from debt investors is a critical component of Australian nonbank lenders’ business models, and the major nonbanks have investor relations high on their priority lists. These issuers have been able to fund their businesses through the credit cycle, and domestic fund managers say they see the appeal of the nonbank value proposition – with appropriately detailed credit work.

Having been absent for two-and-a-half years, a brace of United Arab Emirates (UAE)-origin issuers returned to the Kangaroo market in recent weeks. Deal sources suggest the return of price stability to the oil market in recent has proved to be a catalyst for a reopened Kangaroo market.

The outperformance of KfW Bankengruppe (KfW)’s Kangaroo green bond in the secondary market relative to its vanilla bonds during 2017 has prompted two taps of this line in less than three months, the issuer says. KfW also discusses the opportunity set for the agency in the Kangaroo green-bond market.

Speaking at a roundtable hosted by KangaNews, representatives of Australia’s largest nonbank lenders expressed a degree of confidence that the regulatory impost hanging over the sector may not fundamentally damage their business models. But they are watchful and wary of what they see as the potential for regulatory overreach.

The latest iteration of the biannual Australian Fixed-Income Investor Survey, conducted by Fitch Ratings (Fitch) and KangaNews in September, suggests the buy-side tone on economic fundamentals is warming. At the same time, however, investors are wary about the extended period of spread compression they have experienced across debt asset classes.

The latest instalment of the KangaNews-Moody’s Investors Service (Moody’s) Corporate Borrowers’ Intentions Survey – published annually since 2014 – maintains a longstanding trend of only gradual shifts in corporate debt policy. At the margin, Australasian corporates appear to expect more capital-markets activity but there is no sign of a rush to credit-funded investment.