News
Deal sources say Coles Group (Coles) was able to include a 10-year tranche in its first deal since demerging from Wesfarmers on the back of significant investor demand, while the issuer’s brand and deal preparation held it in good stead during a period of substantial deal flow.
Verizon Communications (Verizon) returned to the Australian market for its second Kangaroo deal on 30 October. The transaction was smaller in size than the issuer’s Australian debut but still pushes the boundaries on Australian dollar tenor through the inclusion of a 20-year tranche with benchmark volume which compares with deeper global markets.
Participants in World Bank’s BOND-I transaction say it has proven correct many of the hypotheses around the potential for capital markets to use distributed-ledger technology (DLT). The challenge now is to achieve wider application so the benefits can be fully realised.
A desire to diversify its funding sources and extend the tenor of its debt book saw Vicinity Centres (Vicinity) make its debut in the euro market on 29 October. The issuer is keen to be a consistent euro borrower and says reliability of 10-year demand was a decisive factor in its market choice.
Origin Energy (Origin) priced its first senior domestic deal since 2006 on 30 October. The issuer says it was able to capitalise on name-familiarity to attract significant levels of demand from investors in Australia and the region despite effectively being a new issuer in the Australian dollar market.
Investor diversification and attractive pricing conditions led to Korea Southern Power’s inaugural Kangaroo deal. Deal sources say the transaction had one of the highest onshore allocations for a Korean issuer.
The Australian Prudential Regulation Authority (APRA)’s latest update to rules covering bank additional-capital instruments could constrict liquidity in tier-two securities at the margin. Better news for the banks came from S&P Global Ratings (S&P), which has upgraded the economic component of its banking industry country risk assessment (BICRA) for Australia and with it the ratings of the big-four banks’ additional-capital securities.
A cluster of long-dated semi-government deals priced between late September and late October. Deal sources say the semi-government curve has steepened in the long end, while a significant redemption profile in the government sector has led domestic investors strongly to support deals.
While a recent clutch of 10-year deals in the Australian dollar corporate market has provided confidence that investor support can be found at tenor, United Energy Distribution (UED) opted for seven-year duration in its domestic return. The issuer says this tenor was the best match for its funding need.
End users can no longer ignore the domestic and international process of reforming benchmark rates, according to speakers at the International Swaps and Derivatives Association (ISDA)’s annual Australian conference in Sydney. The local market is less than halfway through its own transition and the main concern is lack of engagement from many issuers and investors.
DBS Bank (DBS) priced the first Kangaroo covered bond since September 2017 on 17 October. The issuer says global demand for covered bonds has been higher in 2019 than in previous years and adds that the stability of the Australian dollar market compared with other alternatives makes it particularly attractive.
The European Central Bank (ECB) confirmed another round of QE on 12 September, locking in what markets have been anticipating throughout 2019. The European political, economic and central-bank landscape is shifting but unconventional monetary policy seems set for the foreseeable future – despite questions about its efficacy in the real economy.