News
The race to save the planet is real. The science is grim – some say it is already too late to save our species. However, the fact that the transition to a low-carbon economy is as much an economic issue as an environmental one gives debt-market participants reason to be optimistic.
Andrew Schwartz, Melbourne-based group managing director at Qualitas – an investment manager active in Australian commercial property debt with A$2 billion (US$1.5 billion) of committed capital – shares a perspective on the commercial property as an investment destination. He discusses the future direction of the market and the advantages of debt over equity at the current point in the cycle.
Commonwealth Bank of Australia (CommBank)’s residential mortgage-backed securities (RMBS) deal, Medallion Trust Series 2018-1 (Medallion 2018-1), broke new ground in the Australian market with the three-year revolving facility supporting a longer-than-usual weighted-average life (WAL). The issuer insists this innovation adds a valuable tool to the bank’s funding options.
The Australian Office of Financial Management (AOFM) priced its largest treasury indexed bond (TIB) syndication since 2009 on 18 September, issuing a A$3.75 billion (US$2.7 billion) deal due February 2050. The government debt-management agency says a groundswell of demand from domestic fund managers as well as a degree of scarcity value drove the transaction.
New Zealand fund managers say their market has made great strides towards matching global standards for environmental, social and governance (ESG) integration in recent years. While the equity market has led the way – and expects to deliver more stringent exclusions and shareholder activism in future – there is also a growing focus on ESG in the fixed-income sector.
AT&T’s debut Kangaroo deal, which priced on 14 September, marked the return of US corporate issuance to the Australian market for the first time this year. Deal sources say cash repatriation by major US corporate names has drastically reduced offshore issuance from US credits globally, but insist AT&T’s A$1.3 billion (US$949.2 million) result demonstrates that Australia remains open for business to this type of borrower.
After delivering his keynote address at the sixth annual KangaNews New Zealand Debt Capital Markets Summit in Auckland on 8 August, Grant Robertson, New Zealand’s finance minister, shared thoughts on his government’s economic plans and the role of the financial sector.
KangaNews and RBC Capital Markets hosted their annual roundtable for heads of funding at Australia’s big-four banks in Melbourne on 13 August. After an almost unprecedented period of benign market conditions, 2018 has posed new challenges and seen execution risk back on the table. The issuers acknowledge the revived headwinds but say they are well-placed to navigate them.
On 5 September, following the release of the South Australian state budget, South Australian Government Financing Authority (SAFA) revealed indicative gross funding requirement for 2018/19 of A$5.9 billion (US$4.3 billion).
Macquarie University became the third issuer of sustainability bonds in the Australian market, and the first university to price a dual-tranche deal, with its A$250 million (US$179.5 million) transaction priced on 29 August. With impact reporting still in its relative infancy in Australia, the university says the transaction provided the opportunity to show leadership in this area.
The Australian base rate has been on a trend incline throughout 2018, driving up banks’ cost of funds and some lending rates. Debate is raging about whether the trend is structural or cyclical, for how long it will last, how far it could go and the wider consequences.
A green overlay and limited mid-curve supply in Australian dollars from supranational, sovereign and agency (SSA) issuers in 2018, contributed to Kommunalbanken Norway (KBN) achieving its largest-ever Kangaroo bond, deal sources say. In addition, the orderbook shows the extent to which Australian domestic fund managers continue to seek socially responsible investments.