News
Issuer and intermediaries say the first-ever Basel III compliant tier-two Kangaroo transaction shows institutional investors have reached a level of comfort with new-style instruments sufficient to enable further evolution of the product. Other offshore borrowers may be circling although market participants say other routes to issuance may be more appropriate for many.
The treasurer of Western Australia (WA), Mike Nahan, told an investor and dealer panel lunch in Sydney on June 12 that the long-term good of the state economy outweighs near-term demands of rating agencies – which are likely to be satisfied in the coming years, anyway. The state government is doing what it can to improve its budget position, Nahan, says, within the bounds of easing a major economic transition.
The Australian Office of Financial Management (AOFM) released an operational notice on June 10 which sets out the process by which it will auction its holdings of residential mortgage-backed securities (RMBS). Shortly afterwards, the AOFM also disclosed details of the first and second planned sales under its divestment programme, which are due to take place on June 24 and July 14.
KangaNews is pleased to present the results of this year's Fixed-Income Research Poll: the only independent poll of fixed-income investors' views on relevant research in the Australian market. This year's poll saw a record response from qualifying institutional investors, and a strong degree of consistency in the results.
Australian buy-side demand for higher-yielding debt has been evident for some time but market technicals have inhibited participation, market participants insist. The presence of a substantial local bid for the first local-currency denominated term loan B (TLB) facility for an Australian issuer could see this change.
Investor and intermediary participants in the Australian domestic market's latest green-bond transaction identify increasing demand for deals beyond specialist socially responsible investment (SRI) portfolios. Nor should it be necessary for green bonds to price tighter than vanilla bonds to grow the green bond market – in fact, one investor insists this is a product in which the buy side should have skin in the game.
Australasian-origin US private placement (USPP) issuance in the year to date has seen a surge from previous years as borrowers appear to be even more drawn to the long-tenor US market than has previously been the case. Recent issuers and intermediaries tell KangaNews the main factors which are attracting players to the region show no sign of abating.
Key market participants' responses to the news that the Australian Securities Exchange (ASX) will launch a new 20-year Commonwealth government securities (CGS) futures contract later this year diverge. Some are quietly confident that liquidity in the bonds will grow sufficiently quickly to be of immediate benefit to the Australian rates market as a whole, while others suggest the precedents are unconvincing.
New Zealand saw two European-origin supranational, sovereign and agency (SSA) borrowers price inaugural Kauri transactions in the space of a week in mid-May. Issuers and lead managers offer KangaNews their insights into the circumstances which have allowed two new high-grade borrowers to enter the New Zealand market for the first time.
Australia's wholesale tier-one market took another developmental step in mid-May. Participants in the latest wholesale tier-one transaction offer insights around the precise level of institutional-investor take up of the market's two deals to date, and also reveal surprising information about how this cohort of investors can value the franking credit.
A little over two years since the Australian Office of Financial Management (AOFM) ceased investing in residential mortgage-backed securities (RMBS), the government debt management agency announced on May 13 that it would be selling its approximately A$4.6 billion (US$3.7 billion) residual portfolio. Securitisation market participants' response to the news of a substantial forthcoming inflow for the secondary market to absorb contains some surprises.
The Australian Prudential Regulation Authority (APRA) has offered the first public insights from its review of banks' mortgage-lending standards. The impression given by APRA's chairman, Wayne Byres, in a May 13 speech is that the regulator is far from universally happy with the way all authorised deposit-taking institutions (ADIs) calculate borrowers' likely ability to service mortgage debt.