News
On 16 September, New Zealand Debt Management (NZDM) (AA+/Aaa/AA+) decreased its New Zealand government bond (NZGB) programme for the 2020/21 financial year to NZ$50 billion (US$33.5 billion) from the NZ$60 billion announced at the Budget Economic and Fiscal Update 2020 in May.
Following a renaissance of corporate issuers over the past month, Mercury took advantage of momentum in the New Zealand market to print a new green-bond transaction. The NZ$200 million (US$133.7 million) transaction is also the first time in 12 years that Mercury has accessed the domestic market in a senior, retail format.
HSBC Bank Australia’s first residential mortgage-backed securities (RMBS) transaction since 2007 took advantage of the absence of local bank supply to tighten pricing and increase volume. The issuer says it plans to be a prominent issuer of capital-relief RMBS in future.
Every year, KangaNews and RBC Capital Markets host the heads of funding from Australia’s big-four banks to discuss market conditions and the outlook for their sector. In 2020, the COVID-19 crisis has reshaped the landscape completely – most notably by almost completely eliminating the majors’ funding gap and thus removing them from public senior debt markets since the first months of the year.
Kāinga Ora – Homes and Communities (Kāinga Ora) held its inaugural virtual investor day on 19 August to showcase its role as a world-class public-housing landlord and leader in delivering urban-development projects. The goal was to explain the agency’s role to debt investors beyond the normal tenets of its funding programme.
New Zealand market participants gathered virtually on 20 August for the ANZ-KangaNews New Zealand Capital Markets Forum (NZCMF). New Zealand’s economy, politics and COVID-19 response are setting the market’s parameters, and discussion focused on managing through and beyond the current rocky patch.
Asian demand has been a consistent component of the Australian dollar credit market in recent years and – to the surprise of some – has emerged from the first phase of the COVID-19 crisis as a still-reliable bid. Yield and credit quality factors are crucial, as the relative stability Australian credit offers attracts consistent demand.
Liberty Financial priced its largest-ever SME asset-backed securities (ABS) deal on 3 September. The issuer says the collateral mix of its SME transactions has evolved towards a heavier weighting of self-managed super fund (SMSF) investor loans, diminishing some concerns around collateral.
COVID-19 has dominated global market bandwidth in 2020, to the extent that many regulatory initiatives and other market-development projects have been put on pause. This cannot be said for the process of adapting to the demise of interbank offer rates (IBORs), for which the hard deadline of 31 December 2021 continues to loom.
While Australia is not facing the same compulsion as other global markets to drop its credit reference rate – in this case the bank-bill swap rate (BBSW) – there is still growing reason for market participants to understand, and start using, alternative reference rates (ARRs). Commonwealth Bank of Australia (CBA) took a leadership position in 2019 by pricing a securitisation deal linked to Australian overnight index average (AONIA). The bank convened a roundtable with KangaNews to discuss the next phase of evolution.
Qantas’s new 10-year deal was business-as-usual process, the issuer says, as it sought to refinance a 2021 maturity and maintain a diverse funding base. The COVID-19 pandemic was always going to be a big factor in the deal, but Qantas tells KangaNews its financial record and future prospects were sufficient catalyst for investor engagement.
New Zealand inflation-linked bonds reached what some investors regard as fair value in August having lagged an international recovery for the asset class. Some market users see potential for further gains, though this relies on real inflation finally starting to outstrip suppressed expectations.