The Australian Office of Financial Management says its new long-dated syndication was well sought after by investors including higher than usual participation from real-money accounts. The government debt management agency stuck to its plan to issue the new line before year end with options for clear execution windows starting to diminish.
The Australian Sustainable Finance Institute will disclose the latest intelligence from its sustainable finance progress tracker at its annual conference in Sydney on 24 October. Ahead of the update, the institute’s chief executive, Kristy Graham, shares a sneak preview with KangaNews covering some of the primary focus areas and priorities.
After a period in which the euro market was the option of choice for Australian corporates needing global benchmark deal volume, NBN Co’s return to the US dollar 144A market illustrates changing economics. The deal scored the borrower its largest price revision from the marketing range and lowest new issuance concession of its three US dollar deals to date, and deal sources anticipate follow-on supply despite market headwinds.
The Reserve Bank of Australia appears to be comfortable that rate hikes are transmitting more or less normally through the economy despite some abnormalities – such as the relatively higher proportion of fixed-rate mortgages going into the hiking cycle. While some lags remain in place, the suggestion is that the reserve bank is not expecting these to do much additional tightening work for it.
The demands of specialist lending funded by securitisation require Australasian nonbanks to ensure their books have maximum resilience to economic conditions. Arrears performance has so far held up very well in the current cycle and there are – albeit very early – signs that conditions may be improving for nonbanks.
The annual KangaNews-Natixis CIB nonbank lender roundtable, which took place in Sydney in August 2023, came at an interesting juncture for the sector. Nonbanks have responded to a period of elevated competition in the mortgage market by diversifying their books, and the combination of new assets and robust performance in their core sectors mean participants are facing the future with optimism.
A desire to diversify funding by accessing the deepest global market for covered bonds trumped lower funding costs at home for Bendigo and Adelaide Bank in its inaugural Euro covered deal.
After a near two-year hiatus from its home market, Auckland Council elected to use retail format for its latest green-bond transaction. The higher rates environment broadened retail demand, sharpening the pricing outcome for the issuer and illuminating a path that other high-grade issuers may choose to follow.
Suncorp Group maintained a recent trend for significantly oversubscribed Australian dollar deals by financial institutions with its return to the domestic tier-two market on 20 September. The issuer notes wide support for the deal despite ongoing uncertainty about the potential acquisition of Suncorp Bank by ANZ Banking Group, saying market depth may reflect fundamental system growth.
Chorus has joined the growing group of New Zealand corporate issuers to add the Australian dollar market to their funding – and deal sources say there may be more to follow. Chorus says its decision to introduce an Australian dollar programme was strategic and that it plans to be a repeat issuer.
The Bank of Japan’s decision to ease its longstanding yield curve control policy, allowing the 10-year Japanese government bond yield to rise as high as 1 per cent, reverberated through global bond markets. While there is no expectation of an immediate, wide-scale change in Japanese investor behaviour, Australian fixed income sectors with a longstanding reliance on the Japanese bid have reasons to watch the policy path closely.
One of the main factors put forward to explain why Australian true corporate issuance continues to underperform in an otherwise largely positive local credit market is suboptimal execution practice. KangaNews goes inside the deal process with parties on all sides of transactions to understand why many market users believe execution is letting the local corporate market down.