News
Commonwealth Bank of Australia used the window immediately after its results to bring a new senior offering to the domestic market with record-breaking results. These include a final book size of A$7.8 billion (US$5.1 billion) – a figure believed to be the largest on record.
The terms of and demand for La Trobe University’s debut in the debt capital market – a seven-year green bond – held firm despite a rating agency methodology change that put the university’s rating on downgrade review between pricing and settlement. Demand, including specific green demand, during the deal marketing process allowed the issuer to tighten pricing and increase volume.
DBS Bank Sydney Branch’s latest transaction – a debut covered bond from the bank’s Australian branch – took the issuer’s and Singaporean bank Australian dollar issuance further into record territory. DBS Bank reaffirms its strategic positioning in the Australian funding market, saying its latest deal found early demand and maintained momentum throughout the execution process.
Supportive local conditions convinced Westpac New Zealand to return to its domestic market for its latest tier-two transaction rather than – as it suggested would most likely be the case following its previous subordinated debt deal – going offshore. The issuer says the limited supply of five-year senior bank paper this year helped ensure institutional investors were receptive to a tier-two deal.
A step-change in supply dynamics has combined with positive demand factors to boost secondary turnover in Australian semi-government bonds. Local real-money investors generally agree with the suggestion that semi-government tradability has reached a new level, while bid-side liquidity is strong even for less heavily traded names.
Demand has been building during a quiet period for new issuance in the Australian dollar market, allowing Westpac Banking Corporation to print a new three-year deal at a competitive margin. The issuer says market conditions were its primary motivating factor as its funding need is limited approaching the end of the bank’s 2022/23 financial year.
Macquarie University has plumped for full disclosure of the KPIs in its inaugural sustainability-linked loan, acknowledging that such an approach introduces reputational risk should it miss its targets but arguing that accountability is more important. The loan structure also takes steps toward tackling sustainability factors that are currently harder to measure.
Bank of Queensland’s return to the residential mortgage-backed securities market demonstrated a continued retreat in spreads for bank structured finance issuers. Periodic deal flow from banks does not represent a full-blown securitisation revival from the sector but suggests deal economics are stacking up for issuers outside the big four.
The Reserve Bank of New Zealand’s liquidity policy review could fundamentally reshape the way bank liquidity books – some of the country’s most important fixed-income investors, especially in the high-grade space – allocate their money. A worst-case outcome could weaken funding opportunities, the overall health of the New Zealand capital market and even the cost of credit across the economy.
Finding a way to reliably and meaningfully support environmental transition is perhaps the greatest contribution sustainable finance could make to achieving climate goals – and sustainability-linked bonds have been presented as critical tool for doing so. But flatlining issuance highlights what is perhaps the sector’s greatest challenge to date: how to agree, measure and monitor genuine transition ambition.
Every year, ANZ and KangaNews gather global market participants at a roundtable in London to discuss the state of play in fixed-income issuance and investment. The 2023 discussion, which took place in mid-June, took in the growing appeal of the asset class, dynamics that are reshaping currency and tenor of issuance, and ever-growing scrutiny in sustainable finance.
New Zealand’s liquidity policy review has already had an impact on the debt market and could cause a long-lasting shakeup of issuance norms. In June, KangaNews spoke to Kate Le Quesne, director, prudential policy at the Reserve Bank of New Zealand in Wellington, to discuss the regulator’s current thinking.