News

With weakness in the US regional bank sector prominent in debt investors’ thinking and consolidation never far from the front pages, Australia’s nonmajor banks might have expected a challenging funding environment in 2023. Instead, solid balance sheets and the generally positive environment for financial credit have helped issuance maintain a steady path.

Despite an active month for new issuance that saw more than A$25 billion of new credit supply, deal sources say ANZ Banking Group’s three- and five-year senior print on 31 August – itself the largest-ever domestic deal by a big-four bank – still left demand on the table. The scale of liquidity seen in August bodes well for Australian credit issuance in the short and long term.

Australian dollars became Clifford Capital’s first funding currency outside US dollars when the issuer printed its first Kangaroo deal, on 23 August. The issuer talks to KangaNews about aspirations in the market that limited only by the issuer’s growing Australian dollar operations, given the scale of oversubscription its debut deal attracted.

Pre-deal investor engagement, transparency on pricing and volume, and improved market tone helped ING Bank Australia print its largest-ever securitisation deal as it ramps up issuance ahead of a substantial term funding facility refinancing. Deal sources say locking in bids ahead of pricing is an increasingly common feature in securitisation deals as issuers seek to manage potential volatility during execution.

Another robust outcome for an Australian securitisation deal – Brighte’s return to the public capital market – demonstrates demand that should fuel a supply pipeline for the rest of the calendar year, deal sources say. Brighte ran an open execution process without pre-placement of bonds and still found investor interest across the capital stack.

NBN Co says it attracted a diverse investor base – including a book of more than 60 unique accounts – to its latest deal, which was its third-ever green bond and second in the domestic market. The transaction also makes NBN the largest corporate borrower in Australia by outstanding volume.

Consistent opportunities and growing capacity for offshore financial institution issuers are likely to bring NatWest Markets back to the Australian dollar market more frequently in future, the issuer says in the wake of its second Kangaroo deal. Lead managers also predict further near-term Kangaroo deal flow as issuers rush to take advantage of conducive conditions and unsated demand.

Pepper Money believes an improving tone could spell better cost of funds in the securitisation market, noting good demand across asset classes and particular interest in nonmortgage asset-backed securities. Pepper priced its latest auto and equipment securitisation, SPARKZ Trust 7, on 17 August and has a nonconforming residential deal in the pipeline.

Harmoney took advantage of ongoing limited supply of securitisation – and good-quality, diverse credit in all formats – in New Zealand to print its debut public deal. The issuer now plans to be a regular securitisation issuer at home and in Australia, while its arranger says the New Zealand market remains conducive to new supply in various formats.

Ausgrid’s return to the US private placement market for a second jumbo transaction indicates the inrease in optionality for issuers in this sector, deal sources say. The multitranche deal is notable for the inclusion of Canadian dollar and sterling notes – from which the issuer derived a pricing benefit – which further highlight the scale of potential demand for Australian corporate credit.

Avanti Finance has taken advantage of a key strategic acquisition, consumer demand and a changing financier market to deliver growth in its Australian auto book. It has now priced its first local auto asset-backed securities deal, and says it plans regular issuance from this programme as well as New Zealand auto securitisation.

Kauri market watchers are paying particularly close attention to the behaviour of bank balance sheets given regulatory uncertainty about their future demand. The distribution of World Bank’s latest four-and-a-half-year tap offers deal sources grounds for optimism, as it featured a slightly increased bank book allocation than the line’s debut in January this year.