News

Australian dollar corporate issuance may have eased since May but one of the more recent issuers – ConnectEast Finance – says the strength and competitiveness of the market are undiminished over the past six months. The issuer also reveals some encouraging developments in its investor base following its market return.

Relative value helped garner South Australian Government Financing Authority an oversubscribed orderbook in the second syndicated transaction it has issued as a sustainability bond. The issuer says demand was sticky even after price revisions, making allocations one of the more challenging aspects of the execution process.

National Australia Bank reignited big four residential mortgage-backed securities issuance late in H1 with a tightly-priced, upsized A$2 billion deal. Securitisation issuers continue to achieve decent size despite spread compression across the sector dampening volumes after a record period of new issuance in Australia.

Firstmac says its return to green residential mortgage-backed securities issuance – its second such deal, a private placement like the first – represents a step forward for the asset class in Australia. The green notes in the new deal are backed by mortgage collateral that requires homeowners to reduce their properties’ carbon emissions rather than using building standards as a proxy for emissions.

UDC Finance’s latest trade attracted four new investors enter the book even though volume was capped at a significantly lower level than its previous deal. Demand and pricing were robust, the issuer says, despite an economic backdrop that seems set to limit securitisation flow in the medium term.

ANZ highlights an uptick in demand from Asian investors in a deal that compressed the issuer’s 3-5 year credit curve to pre-pandemic levels. ANZ priced its first domestic benchmark deal since January on 11 June, with the issuer noting that its A$4.25 billion (US$2.8 billion) three- and five-year transaction reaffirmed the Asian bid for Australian dollar paper.

While Australia’s first green bond came from a high-grade issuer, bank and corporate borrowers were quick to get in on the action. But an initial rush to claim a series of market firsts has evolved into a much more complex network of supply drivers. The outcome to date is that labelled bonds are playing no more than a marginal role in the Australian credit market.

KangaNews has been tracking the progress of Australian and New Zealand sustainability labelled debt instruments since the market began, including coverage of groundbreaking transactions and keeping extensive issuance data in the KangaNews deal database. A timeline of key developments and data points illustrates market progress over the years.

The first Australian sovereign green bond achieved a quantifiable greenium for the Australian Office of Financial Management but speculation outside the deal group that it might deliver a blowout book did not come to pass. Support built primarily in the Australian time zone, though deal sources insist an overnight price revision masks solid demand out of Europe.

An annual investor update in London found the Australian securitisation market – and key European investors – in confident mood despite a complex domestic economic backdrop. Market participants describe a resilient collateral environment and ongoing positive capital market conditions that they believe should linger for the medium term at least.

Offshore investor support enabled NOW Finance to issue an asset-backed securities transaction that was more than twice the size of its previous deal, the issuer says. Risk-retention compliance was key in securing the offshore bid, and issuer and lead are confident that, with this work complete, appetite will be robust for future deals.

Commonwealth Bank of Australia (CBA) made its debut in green tier-two format for its first euro deal in unsecured format since 2018. The issuer was rewarded with what it views as a clearly definable ‘greenium’, while also satisfying pent-up European investor demand outside covered bonds and continuing the bank’s build towards total loss-absorbing capacity.