News
Speaking exclusively to KangaNews, Tim Pallas, treasurer of the state of Victoria, discusses the state government's decision to place its infrastructure programme on a 10-year cycle to reduce political risk. Pallas also offers his insights into Victoria's fiscal strength, how the state government thinks about financial headroom and funding issues including the potential role of green bonds.
In the wake of New Zealand's fifth corporate deal of 2016, and the country's largest non-financial corporate transaction since 2009, market participants involved in the transaction suggest that both retail and institutional investor demand remain supportive of further corporate supply.
Half-year results released by ANZ Banking Group (ANZ) on May 3 highlight the extent to which the institutional arm of the bank is in the firing line of chief executive Shayne Elliott's drive to "build a simpler, better capitalised and more balanced bank". ANZ has cut its dividend payout, in part to further its goal of reinforcing its capital position.
The arranger of the first Australian asset-backed securities (ABS) transaction to include a tranche of certified green notes says this tranche's relatively tight issue margin could be repeatable in future such deals. The deal's issuer, meanwhile, says it encountered ample demand for the green tranche and hopes to repeat the mixed-format securitisation structure in due course.
Results of the Australian Fixed-Income Investor Survey for H1 2016, conducted by KangaNews in February and published in partnership with Fitch Ratings (Fitch), were published on April 15. The results show the Australian investor base to have declining expectations of credit supply growth, but to have only moderate concerns about the trajectory of the Australian economy.
On April 7, Korea Development Bank (KDB) (AA-/Aa2/AA-), priced its first-ever Kauri transaction. According to KangaNews data, the deal is the first Kauri issued without a triple-A rating since Telstra Corporation printed NZ$100 million (US$67.7 million) of fixed-rate notes in May 2010. KDB and its leads are cautiously optimistic about the prospects for further Kauri issuance diversity in future.
The Australian Prudential Regulation Authority (APRA) released its latest discussion paper on the local interpretation of the net stable-funding ratio (NSFR) for banks on March 31. The paper includes proposed treatments for a raft of assets and liabilities, with particular focus on – but no sign of concessions for – internally and externally securitised assets.
The downgrade of a clutch of Australian dollar corporate bond issuers from investment grade into high-yield territory has brought the issue of mandate restrictions back onto the agenda. With limited capacity for high-yield bonds in the domestic institutional space, local asset managers describe the challenges caused when bonds bought at investment-grade level fall below triple-B status.
Issuer and lead managers on Toronto Dominion Bank (TD Bank)'s record-breaking Kangaroo transaction say the deal opens the way to additional Kangaroo market supply from Canadian banks and global financial institutions (FIs) more generally. TD Bank itself hopes to continue to be a regular issuer going forward.
AusNet Services (AusNet) says its ability to print US$375 million of 2071 non-call 5.5-year Reg S hybrid notes came as improving offshore markets offered some clarity around fair pricing of hybrid instruments. The deal's lead managers insist a more positive environment for credit and risk should support ongoing activity, even as markets continue to be characterised by fickle execution windows.
Securitisation market participants say the slow start to the issuance year in their sector comes as no surprise given wider market conditions. They also acknowledge ongoing demand challenges that could shave volume off deals from the largest issuers in particular – but remain confident that deals will come through, and be available to a diverse range of issuers.
Australian-origin corporate issuance has been even slower than usual at the start of the new year, both at home and offshore. However, with reporting season fast approaching intermediaries believe global markets will continue to offer opportunities to Australian companies – albeit with challenges.