News

Issuers and intermediaries in the high-grade Kauri market say pricing and demand fundamentals should be supportive of an improved H2 issuance outcome. Despite a slow period for new issuance of late, market users say the Kauri asset class has continued to develop in the background.

Deal sources in L-Bank’s third New Zealand dollar deal, and its first at a 10-year maturity, suggest its completion is the fruit of persistence and ongoing market engagement by the issuer. The transaction attracted robust domestic support, including one new investor to L-Bank’s bonds in any currency.

A report published on 25 July by Responsible Investment Association Australasia (RIAA) suggests that nearly half of all “professionally managed” assets in Australia were subject to some form of responsible-investment strategy in 2016. Most of this asset base is managed under what RIAA calls “broad” responsible-investment approaches, but the quickest growth is taking place in the more closely defined “core” category.

Liberty Financial (Liberty)’s latest residential mortgage-backed securities (RMBS) deal is the largest ever by this or any other Australian nonbank issuer, and the biggest nonconforming securitisation in Australia since the financial crisis. The issuer ascribes its success to the inclusion of a euro-denominated tranche and conducive market conditions.

The investor-friendly approach adopted by Banco Santander in the execution of its A$800 million (US$611.9 million), senior-nonpreferred EMTN was instrumental in the deal’s volume and bookbuild outcome, deal sources suggest. They say other offshore bank issuers are circling, based on a view of Australian dollars as a good diversification option.

The Australian Prudential Regulation Authority (APRA) published its long-awaited determination of the definition of “unquestionably strong” in relation to Australia’s big-four banks on 19 July. It also hints at a potential future move more closely to align Australian capital ratio methodology with international standards.

In its market debut, University of Technology, Sydney (UTS) reaped the benefits of tightening spreads and a positive market tone to print the largest and tightest domestic transaction by an Australian university, deal sources say. They also attribute the deal’s success to a growing familiarity with the university funding model.

Issuer and lead sources on Bank of Queensland (BOQ)’s debut conditional pass through (CPT) covered bond say the deal paves the way for more Australian-origin issuance for the broadly European asset class. The deal helped BOQ achieve a key target in its funding strategy as well as provided a welcome level of ratings stability in an uncertain backdrop.

In the wake of Adelaide Airport’s first domestic transaction in seven years, deal sources attribute robust demand to a desire for infrastructure assets as well as the ongoing hunt for credit product. Flexibility on the part of the issuer and investors was also key.

Commonwealth Bank of Australia (CommBank) took advantage of tight credit spreads and long-dated demand to print its longest-ever benchmark transaction on 6 July. The bank printed US$1.5 billion of 30-year bonds, tripling the duration of its previous longest-dated senior-unsecured deal and adding more than four months to its weighted-average portfolio duration at the same time.

The latest total loss-absorbing capacity (TLAC)-compliant deal denominated in Australian dollars to come to market attracted incrementally more domestic demand than its closest comparison transaction, leads say. When – and even whether – this type of issuance will migrate to Kangaroo documentation remains an open question, however.

Australia’s latest issuer into the US dollar Reg S market, SGSP Australia Assets (SGSP), says the Asian parentage that previously opened the door to this regional market is likely no longer a prerequisite. The scale and quality of the Reg S bid means SGSP now includes this issuance option among its three core debt capital markets.