News
The divergent fortunes of the Kangaroo and Kauri markets stand out in the 2024 KangaNews survey of global supranational, sovereign and agency sector borrowers. The disparity seems set to continue, too, with the Australian dollar market predicted to be a vogue issuance destination in the coming months while New Zealand remains very much a niche proposition.
Lead managers on Banco Santander’s first-ever tier-two deal in the Kangaroo market highlight “insatiable” demand for the asset class, suggesting interest should be strong enough to support follow-on supply. The domestic real-money bid came through for Santander, facilitating a significant price compression and notable performance on the break.
With the inclusion of a scope-three emissions target and neutral zone, deal sources argue that Cromwell Property Group’s dual-labelled sustainability-linked loan and green loan stands out from what has been done before. In particular, the structure further tightens the link between the borrower’s corporate objectives and its financing.
A blockbuster book driven by offshore demand – and significant growth in the qualifying asset book – enabled CPP Investments to double the size of its first Kangaroo green bond in its second foray into the sector. Market dynamics made relatively short tenor the best option for the issuer, which in turn dictated the international skew of the orderbook.
Queensland Treasury Corporation kicked off syndicated issuance for 2024-2025 last week with a A$1.5 billion tap of its July 2036 benchmark, after responding to investor interest for the line. The issuer capped the transaction volume, but notes that market “jitters” on sector supply had cooled by the time it brought the deal.
After heading to the sterling market a week previously, Westpac Banking Corporation returned to its home market to pick off an opportunity to top up its tier-two issuance. The result demonstrates the ongoing strength of the domestic market and demand for the asset class, the issuer says.
The world’s largest supranational, sovereign and agency issuers have capital market innovation and leadership as part of their purpose. Sustainable finance is typically the most discussed area for this, but capital markets digitalisation is another key component. KfW Bankengruppe is at the fore, most recently announcing its first blockchain-based digital bond issue and thus marking the next step in its digital evolution.
The 2024 iteration of the KangaNews Fixed Income Trading and Research Poll marks a significant change in the landscape of market support. A new bank has risen to the top of the research landscape, while the results overall show much more volatility in outcome than has typically been the case.
The long-awaited reform of New Zealand’s water infrastructure is making significant progress in 2024. While the financing format and thus impact on capital markets supply will still take up to two years to emerge in full, market users familiar with the sector say there could be a significant sustainable finance opportunity – including for the issuance of so-called “blue bonds”.
Market participants say the value of Australia’s sustainable finance roadmap – released by federal Treasury on 19 June – is not discovering new ground but providing direction by tying existing strands of work together in a tangible timeline. The main benefit is clarity on the direction of travel and guidance on key actions and next steps, including who will be doing what and an eye to future policy direction.
Investors enthusiastically lapped up the first covered-bond deal from an Australian major bank this year. Westpac Banking Corporation and its leads say the issuer paid no concession to its outstanding curve and was able to upsize the deal by £500 million despite tightening the margin.
An evolution in the way nonresidential RMBS deals are structured is improving the economics of this product offering for issuers, deal sources agree. Alongside relative value, and other driving factors, dealers believe this is supporting deal flow in this recently active niche area of Australian securitisation.