News
Citibank, the operating company (opco) issuer of Citi, issued its first-ever Australian dollar deal on 10 May. The transaction came in 3(a)(2) format, which limits domestic bank-balance-sheet participation. However, deal sources say the scarcity value of opco debt from a global bank was enticing for domestic fund managers.
The Australian Securitisation Forum (ASF) and Perpetual Corporate Trust (Perpetual)’s Australian Securitisation Issuer Report 2019 highlights the continued importance of finding new investors to ensure the ongoing viability of securitisation issuance through the cycle. Consistent issuance is found to be the most effective, but in lieu of this issuers say innovation in assets and structure can help attract and retain investors.
Western Australian Treasury Corporation (WATC) revealed a A$7.7 billion (US$5.3 billion) borrowing programme for the 2019/20 financial year on 13 May, following the release of the Western Australia (WA) state budget on 9 May. The new-money requirement is A$1.1 billion, down from the estimated A$1.5 billion at the last update on 31 March.
On 9 May, National Australia Bank (NAB) became the first Australian major bank to price a tier-two deal since Australian Prudential Regulation Authority (APRA)’s proposed changes to tier-two capital requirements were released in November 2018. The issuer and lead say a small pricing premium still exists due to uncertainty around the instrument, but that investor appetite remains.
Westpac Banking Corporation (Westpac)’s self-led deal on 8 May was the first of significant volume from any sector to come to the Australian market since mid-April, with public holidays and a Reserve Bank of Australia (RBA) cash-rate decision giving cause for pause. The issuer says the transaction’s outcome proves that the market remains highly constructive.
The Australian asset-management industry continues to grow but it has yet to produce a consistently diverse local credit market. Allocations to income-generating product will likely increase over time, though market dynamics suggest the most liquid and highest yielding ends of the market may have the healthiest prospects.
The Australian Sustainable Finance Initiative (ASFI) aims to “set out a roadmap for realigning the finance sector to support greater social, environmental and economic outcomes”. Following its launch at the end of March, KangaNews spoke to seven member institutions of the ASFI steering committee about the initiative’s goals and how they will be measured.
Northern Territory Treasury Corporation (NTTC) has revealed an estimated borrowing programme for the 2019/20 financial year of A$1.1 billion (US$771.4 million). The requirement is a step down from NTTC’s A$1.75 billion requirement in the 2018/19 financial year, reflecting a lower level of maturing debt, but remains elevated compared with historical funding requirements.
The domestic housing market has soared as a risk factor in the minds of Australian fixed-income investors according to the latest Fitch Ratings (Fitch)-KangaNews Australian Fixed Income Investor Survey. A deeper look at the data suggests investors believe risk is contained, but the survey as a whole points to expectations of a slowing economy.
Athena Home Loans (Athena) is planning a multitrack approach to wholesale funding as it rolls out an ambitious plan to compete with the major banks for prime home-loan business. Public residential mortgage-backed securities (RMBS) issuance is part of the strategy but Athena is also targeting funding via a mortgage fund and direct loan sales, to reach investors that do not participate in the securitisation market.
High-profile difficulties experienced by some issuers in Australia’s high-yield bond market have brought the value and distribution of such securities into question. Institutional market participants say there is nothing fundamentally wrong with the high-yield sector but argue that troubled transactions reaffirm the need for securities to be properly valued and appropriately distributed.
According to senior executives at MUFG Bank (MUFG), appetite for Australian assets from Japanese and Asian investors has shown no sign of slowing. The range of funding markets open to corporate Australia continues to expand as a result, with the burgeoning Samurai loan market a particular focus for the bank.