News

Port of Brisbane and Transurban Queensland’s return to domestic issuance was greeted with solid book volumes and significant margin progression. Deal sources say the much-heralded late-year uptick in Australian dollar corporate deal flow could still eventuate though a changing market backdrop and the limited execution window could make corporate supply fall short of expectations once again.

The Australian dollar securitisation market has continued to offer issuance opportunities for originators of a wide range of collateral despite revived rates uncertainty and an uncertain geopolitical backdrop. Recent issuers from outside the prime mortgage sector note ongoing supportive liquidity, improving pricing conditions and a noteworthy level of domestic investor support.

While US economic data continue to be resilient, higher energy prices and rising long-term interest rates increase the probability of a US recession in 2024. But even if the outlook weakens, the lingering impact of super-normal liquidity and a structurally tight labour market from the pandemic period could be enough to maintain the function and appeal of the US bond market to global issuers.

The centrepiece of the KangaNews Mutual Sector Wholesale Funding Seminar is the discussion of funding conditions for the sector and the credit market more generally. In a year that has seen a clutch of significant bank failures offshore – but also notable growth in the capacity available to financial institution issuers in the Australian dollar term debt market – speakers at the 30 August seminar counselled mutual banks to stick to the old values of investor engagement, open communication and access to funding diversity.

The Australian Prudential Regulatory Authority suspects the major banks’ additional tier-one funding instruments are increasing risk in the sector. The regulator has reopened the debate about the amount of this form of capital in banks’ mix and the appropriateness of AT1 for retail investors.

Paul Gruenwald, New York-based chief economist at S&P Global, shared his global insights at the KangaNews New Zealand Debt Capital Market Summit in Auckland in September – taking in regional and global economies, US dollar strength and economic trajectory, and the growing influence of sustainability on economics.

The Australian auto lending market is undergoing a similar structural shift to that experienced by the nonprime mortgage lending market a few years ago: a wide-scale withdrawal by bank balance sheets and a proliferation of new and existing nonbank lenders. Auto-backed securitisation issuance is booming as a result.

Western Australia has a different set of challenges from most of its Australian state peers. While its budget position is the envy of the group, the driver of its recent revenue bonanza – the resources sector – makes for a more difficult path to the low-carbon future. The state’s treasurer, Rita Saffioti, speaks to KangaNews about debt reduction and bond issuance, sustainability goals, migration and how it hopes to help alleviate the housing crisis.