News

KangaNews understands the Australian Prudential Regulation Authority could be close to changing the liquid-assets requirements for authorised deposit-taking institutions (ADIs) which are branches of offshore banks. Market sources say there are two key measures under consideration: one would likely reduce the volume of liquid assets these banks are required to hold, the other could clear the way for greater allocation to securities which do not qualify as high-quality liquid assets (HQLAs).

The first release of second-round submissions to Australia's financial system inquiry reveals limited enthusiasm from market participants around the inquiry's interim report policy options concerning corporate bonds. A number of new submissions argue that easier access to retail issuance will make little difference to Australian corporate bond supply, while others reject the idea of removing dividend imputation as a way of levelling the tax playing field between equity and other asset classes.

Australia could be close to seeing its first wrapped transaction since the financial crisis. While the lone survivor in the Australian wrapper space – Assured Guaranty – claims the monoline wrap product can play a valuable role, domestic institutional investors say the rebirth will, at best, be gradual.

AMP Capital says persistent low yields have not dampened the growing appetite of Australian retail investors for credit – as demonstrated by the fund manager's Corporate Bond Fund passing A$1 billion (US$935.8 million) in funds after management early in August, four years after being made available to retail investors. AMP Capital is also confident the domestic-focused fund will see more investment opportunities in the coming months.

Moody's Investors Service (Moody's) downgraded its rating on the state of Western Australia (WA) – and on Western Australian Treasury Corporation (WATC) – to Aa1 on August 25, based on the rating agency's belief in a growing risk that WA's deteriorating debt metrics and ongoing deficit position "may not be reversed soon". Moody's also changed its outlook on the state's rating, to stable from negative.

The new powers which enabled the UK's Financial Conduct Authority (FCA) to impose a one-year ban on the sale of contingent convertible (CoCo) securities to retail investors are referenced in the Australian Securities and Investments Commission (ASIC)'s submission to the Australian financial system inquiry (FSI).

The New Zealand government is targeting reduced compliance costs for issuers and wider availability of instruments in the local retail market through a number of new policy decisions. A clutch of policy updates were revealed by Craig Foss, New Zealand's minister of commerce, at the KangaNews New Zealand DCM Summit in Auckland on August 6.

The prospects for issuance of green securitised product in Australia are being explored on the back of a number of breakthroughs for green assets, including the growth of socially responsible investment (SRI), Australia's first green-bond issue and a landmark US securitisation from Toyota Financial Service (Toyota). But Australian market participants acknowledge that local asset-backed deal flow in green format is likely a distant prospect.

National Australia Bank (NAB) and Westpac Institutional Bank (Westpac) scored notable successes as intermediaries in the Australian domestic bond market in the first half of the year, according to KangaNews league tables. Deutsche Bank's strength in the primary Kangaroo and semi-government markets put it in a leading position for aggregate Australian dollar issuance. Meanwhile, ANZ maintained its dominant status in New Zealand.

KangaNews is proud to reveal the results of its 2014 Fixed-Income Research Poll, in which Australian institutional investors were asked to vote for the best research providers across a range of sectors relevant to their market. The poll – the fourth run by KangaNews – saw a first-time winner in the overall category as well as continued strong performance from some of the market's most-respected analysts.

Scentre Group (Scentre) (A/A1) – the entity formed out of the old Westfield Retail Trust (WRT) and Westfield Group (Westfield)'s remaining assets in Australia and New Zealand – has quickly established a bond curve, placing €1.6 billion (US$2.2 billion) and £400 million (US$685.3 million) in a four-tranche deal on July 8. The transaction does not fully refinance a substantial bridge facility entered by the issuer, though Scentre tells KangaNews there is no rush to return to capital markets.

KfW Bankengruppe (KfW) – the Kangaroo market's largest single issuer – introduced its green-bond programme on July 7. However, the prospect of KfW following World Bank into issuance of the product in the Kangaroo market seems to be a longer-term one, as the agency tells KangaNews it expects to debut in euros and plans initially to concentrate on that market and US dollars.