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Investors are adjusting to a new normal in the Australian high-grade market as conditions settle after March’s turmoil. Reserve Bank of Australia (RBA) bond purchases slowed to a halt by the mid-way point of the year, but investors say its presence is still bringing stability and creating opportunities.
Investors are adjusting to a new normal in the Australian high-grade market as conditions settle after March’s turmoil. Reserve Bank of Australia (RBA) bond purchases slowed to a halt by the mid-way point of the year, but investors say its presence is still bringing stability and creating opportunities.
National Australia Bank (NAB) became the first Australian major bank to enter public debt capital markets since the onset of the COVID-19 crisis on 10 July, with the pricing of a second deal from the issuer’s wholesale-targeted additional tier-one (AT1) programme.
The KangaNews Market People of the Year are the individuals who voters in the KangaNews Awards 2019 believe went above and beyond their roles to contribute to the development of the Australian and New Zealand debt markets. There are no restrictions on the firms, positions or seniority of winners – voters are simply asked to consider who contributed most to the market in either or both 2019 specifically or across the span of a career.
Firstmac’s latest residential mortgage-backed securities (RMBS) deal demonstrates the continued rebound of nonbank securitisation since the COVID-19 crisis, the issuer says, with deep investor engagement leading to strong demand. Firstmac’s immediate liquidity needs are now met, allowing it to focus on retaking prime-mortgage market share from the major banks.
DBS Group Holdings made its Australian dollar market return on 8 July. The issuer has been a reliable source of Australian dollar supply in recent years and says its latest deal was predicated by a currency need at the parent bank and a view that funding markets may deteriorate in the short-to-medium term.
SEEK says it is pleased with the outcome of a recent liability-management exercise, despite a tap to its 2026 subordinated bond coming up short of launch volume. The issuer says it is in a comfortable liquidity position even with a challenging operating environment and has been able to complete the redemption of its 2022 maturity bonds.
The Australian Office of Financial Management (AOFM) revealed on 8 July that the pause on inviting investment proposals for its Australian Business Securitisation Fund (ABSF) will remain in place for the time being. It says the fund was designed “as primarily an exercise in market development” but the process of achieving this development is on hiatus and therefore the AOFM will not progress with further ABSF investments.
The Australian dollar corporate debt market finished the first half of 2020 with a flurry of deals and greatly improved sentiment. Corporate originators do not expect the floodgates of issuance to open in the second half but say conditions should be supportive for active issuers.
Increased issuance from the AOFM – including targeting maturities of 3-5 and 10-12 years – and the Reserve Bank of Australia (RBA)’s intervention in the Australian sovereign bond market have accelerated Australian Securities Exchange (ASX) thinking about a new contract in its bond futures suite. The exchange is planning to introduce a new five-year contract by the end of the year.
On 3 July, the Australian Office of Financial Management (AOFM) gave issuance guidance for the 2020/21 financial year, which will apply until the Federal government budget is handed down in October 2020. There is no formal overall volume stipulated, but the AOFM expects to continue to tender Treasury bonds at a rate of A$4-5 billion (US$2.8-3.5 billion) most weeks.
Bluestone Group continued the steady flow of securitisation deals coming to market with a new residential mortgage-backed securities (RMBS) deal on 30 June. The borrower says government intervention paved its path to market and is allowing the nonbank lender to continue originating and securitising prime and near-prime mortgages.