News
An influx of financial institution (FI) supply from outside the domestic major-bank space came to the Australian dollar market in July. Market sources say the reality of a likely decline in major-bank senior supply going forward – and consequently tighter big-four senior spreads – has caused demand to spike, supporting increased issuance diversity.
Supportive lenders, a commitment to high standards of governance from day one and appetite for high-quality assets have allowed Brighte to fast-track a public capital-markets debut that now looks likely to happen in 2020. The company has committed to provide green securities to the securitisation market and is exploring options for certification and assessment of its asset pool.
National Australia Bank (NAB) made its first move towards filling its total loss-absorbing capacity (TLAC) tier-two requirement on 29 July, pricing a US dollar transaction which deal sources say maintained the momentum of recent predecessors. NAB’s callable structure also prompted particularly strong demand from investors in Asia, where appetite for spread product continues to build.
New South Wales Treasury Corporation (TCorp)’s pricing of a second benchmark deal in the space of a month means 2019 is already the issuer’s most active period for syndicated deals since 2013 as it seeks to make headway on a larger 2019/20 borrowing task.
The Australian Office of Financial Management (AOFM) released its final investment principles for the Australian Business Securitisation Fund (ABSF) on 22 July. In speeches in Sydney and Melbourne, the AOFM suggested that ABSF investment will start cautiously in areas close to the existing market before moving in time to the most poorly served aspects of SME lending.
Westpac New Zealand (Westpac NZ) priced the local market’s largest-ever senior financial institution (FI) deal on 24 July. The issuer tells KangaNews undersupply in the market created the volume opportunity despite deposit rates remaining elevated.
Conducive funding conditions spurred a return to long-dated local corporate issuance for AusNet Services (AusNet), which printed a 10-year deal on 24 July. The emergence of consistent opportunities for 10-year issuance spurred the Australian corporate market to its best-ever year in 2017, and some market participants believe investors’ hunt for yield may be reopening the window.
Australian bond issuance was healthy overall in the first half of 2019 but continued to struggle to produce credit diversity, according to KangaNews’s transaction data. Elsewhere, the securitisation market delivered volume and breadth while high-grade Kangaroo issuance swung back to the mid-curve.
Reserve Bank of Australia (RBA) assistant governor, Christopher Kent, says adjustments to the committed liquidity facility (CLF) will reduce banks’ need for supplementary liquidity while ensuring strong incentives to manage liquidity risk appropriately remain in place.
The Australian major bank influx into tier-two issuance continued on 19 July as ANZ Banking Group (ANZ) printed a domestic transaction. The issuer says it was strategically important to execute a sizeable and successful Australian dollar deal shortly after the Australian Prudential Regulation Authority (APRA)’s total loss-absorbing capacity (TLAC) announcement, and that domestic investor participation was particularly pleasing.
NRW.BANK issued its largest-ever Kangaroo market deal, and its first in the mid-curve since 2006, with a A$450 million (US$316.3 million), five-year transaction that priced on 19 July. The issuer’s Dusseldorf-based director, capital markets funding, Tatjana Beuer, talks to KangaNews about an evolving relationship with the Australian dollar market.
Westpac Banking Corporation (Westpac) was the first Australian major bank to print a tier-two deal following the Australian Prudential Regulation Authority (APRA)’s final total loss-absorbing capacity (TLAC) requirement ruling. The issuer says a lower-than-expected incremental tier-two requirement makes the task more manageable and current conditions provided a tailwind, but longer-term questions are yet to be resolved.