News

In September, BNZ and KangaNews brought together a group of the most significant issuers and investors in the New Zealand debt market – from on- and offshore – for their annual roundtable discussion. In one of the most insightful conversations in this long-running series, Kiwi market participants analyse the present and future state of play.

Despite countless doubters and detractors, the European Central Bank (ECB) joined the multi-asset-buying policy trail in Q1 2015. To some, this unprecedented, extensive and expansionary monetary action saved the euro, or at least prevented an economic recession turning into a potentially irreparable depression. Market participants are now asking what comes next.

The state treasurer for Western Australia (WA), Ben Wyatt, says a recently released Productivity Commission report recommending a radical overhaul of goods and services tax (GST) distribution among states puts the impetus firmly on the Commonwealth government to follow through.

The report of Australia’s Productivity Commission into the way goods and services tax (GST) receipts are shared will, if adopted, entail a major revenue spike for Western Australia (WA). WA has seen its GST grants from the Commonwealth grants fall to less than 30 cents in the dollar GST raised in the state at times, but the Productivity Commission’s recommendations could see WA’s GST grant revenue increase by as much as A$3.6 billion a year (US$2.8 billion).

A marginal – but surprising – expansion of the committed liquidity facility (CLF) provided to banks by the Reserve Bank of Australia (RBA) for 2018 could boost demand for CLF-qualifying credit, a Deutsche Bank research note suggests. A concurrent marginal easing of demand for sovereign bonds should easily be offset by expected reduced supply, analysts believe.

In the wake of a brace of recent additional tier-one (AT1) deals from big-four Australian banks, heads of funding tell KangaNews they expect the domestic retail market to continue to provide the bulk of this type of capital. This is despite a massive oversubscription greeting a rare foray into foreign-currency AT1 issuance by Westpac Banking Corporation (Westpac).

In March this year, Western Australia (WA) had its first change of government in eight years. Following the September delivery of his first budget, the state’s treasurer, Ben Wyatt, talked to KangaNews about the new government’s targets of financial prudence, and how its revenue and expenditure measures should reassure investors, markets and rating agencies.

The arranger of Australia’s latest social benefit bond (SBB) says institutional investors are taking a more proactive interest in the asset class – though substantial allocations remain a work in progress. The frequency of impact-investment transactions has grown in 2017, but to attract the institutional investor base market participants say more scale is still needed.

The issuers of two new residential mortgage-backed securities (RMBS) deals highlight engagement by investors – including offshore accounts – all the way down the capital structure as instrumental to volume outcomes. The distribution profile of both transactions demonstrates the extent to which the net is being cast wider.

Issuer and investors say pricing on Deutsche Bahn’s debut Kangaroo deal worked for both sides. However, final book size may have been somewhat tempered by the fact that Deutsche Bahn falls into a mandate gap for some of Australia’s largest institutional accounts.

A perfect alignment of market conditions drove World Bank to use a unique approach to access Kangaroo and Kauri markets simultaneously in its latest transaction. The volume outcome demonstrates the value of World Bank’s strategy – most importantly its willingness to respond to demand conditions.

In August, Contact Energy (Contact) finalised a NZ$1.8 billion (US$1.3 billion) green borrowing programme – the first such certification completed by a New Zealand issuer and also the largest-ever single green certification by the Climate Bonds Initiative (CBI). KangaNews spoke to Louise Tong, Contact’s Wellington-based head of capital markets and tax, about the thinking behind the initiative, the process and debt-issuance plans.