News
Latitude Finance Australia (Latitude) capped the size of its second-ever public securitisation deal and ran a limited marketing process to reward investors that have consistently provided reverse enquiry since the issuer’s March debut. Latitude says further investor diversity remains part of its funding strategy and this goal will likely be to the fore in its next deal – which may be backed by different collateral.
The 2017/18 Australian Commonwealth budget enabled the Australian Office of Financial Management (AOFM) to project a reduced year-ahead funding requirement for the first time since the financial crisis. Although market participants have no expectation of significant surpluses ahead, they are thinking about how lower government bond issuance might affect market dynamics – with eyes turning first to the sluggish 20-year futures contract.
In the wake of the Australian market’s second billion-dollar deal from a global corporate issuer in less than three weeks, deal sources insist the outcome underscores the local market’s evolution on the global stage. This means truly global brands are becoming increasingly comfortable with their ability to execute meaningful transactions with minimal execution risk in the local market.
In a New Zealand government bond (NZGB) programme update released on 23 August, the New Zealand Debt Management Office (NZDMO) revealed that its 2017/18 programme will remain unchanged in light of the pre-election economic and fiscal update 2017.
Ausgrid made its US private-placement (USPP) market debut in early August, with a US$1.885 billion-equivalent transaction comprising 10-, 12- and 15-year tranches. Sources say the deal’s record-breaking outcome demonstrates the extent to which USPP remains a viable funding option for Australian corporates in long maturities – even if it has been cannibalised by the domestic market out to 10 years.
Pepper Australia (Pepper) printed a A$500 million (US$393.1 million) debut deal off a new residential mortgage-backed securities (RMBS) programme on 11 August. The Pepper I-Prime programme is more heavily weighted towards investment loans and has been developed in response to evolving investor appetite, the issuer says.
The cost of funding in Australian dollars is well inside other options at present, including US private placement (USPP). So says Victoria Power Networks (VPN)’s treasurer in the wake of its first domestic transaction in three-and-a-half years. A trio of factors enabled VPN to achieve record-breaking pricing.
New Zealand’s investment landscape has seen a step change in the use of screening over the past year according to the findings of a report published by Responsible Investment Association Australasia (RIAA). “Consumer demand combined with media and political pressure in 2016” sparked 2,500 per cent year-on-year growth in “core” or screened assets under management, to NZ$42.7 billion (US$31.2 billion).
The debut Kangaroo transaction issued by Verizon Communications (Verizon) highlights the increasingly productive state of the Australian dollar corporate bond market and its international competitiveness, market users say. Verizon elected to debut in Australia off a local programme, maximising the scale of its deal without compromising on relative pricing.
In the wake of New Zealand’s first-ever green bond, the deal’s issuer and arranger express optimism around the development of socially responsible investment (SRI) locally. In particular, they highlight a change in the nature of conversations market participants are having about the emerging asset class as a sign of burgeoning demand.
In the wake of two – one domestic and one offshore – senior-unsecured deals issued during the month of July, Bank of New Zealand (BNZ) says lower volume of domestic issuance in recent years is offset by a greater call on foreign-currency markets in line with issuer strategy. There has been no impact on demand from a one-notch Moody’s Investors Service (Moody’s) downgrade in May 2017, the issuer insists.
Australian Catholic University (ACU)’s sustainability bond – the first for an Australian issuer and for a university anywhere in the world – is another critical step forward in building the local market for socially responsible investment (SRI), the deal’s arranger insists. The deal also underlines the domestic market’s capability, relative to other options, in providing reliable SRI funding.