News
Investment-grade corporate Australia has weathered the COVID-19 crisis better than could have been expected as the pandemic accelerated in March and April 2020, according to participants at a Fitch Ratings-KangaNews roundtable at the end of the year. A supportive local debt market was just one of the factors behind this resilience.
The Reserve Bank of Australia (RBA) and Reserve Bank of New Zealand (RBNZ) used their respective November monetary-policy decisions to roll out a raft of additional support measures for economies in the earliest stages of recovery. There are reasons for optimism – including a receding prospect of negative rates in New Zealand.
One of the most popular annual sessions at the KangaNews Debt Capital Markets Summit is the big-four bank treasurers panel. There was no shortage of discussion topics at the 2020 videoconference iteration, even though the majors have had minimal wholesale issuance to do and there is little chance of a 2021 rebound.
On 4 January, European Investment Bank (EIB) (AAA/Aaa/AAA) launched a new, long six-year, benchmark Kangaroo climate-awareness bond (CAB). The forthcoming transaction has minimum volume of A$300 million (US$231.2 million), and indicative margin of 26 basis points area over semi-quarterly swap and 30.1 basis points area over Australian Commonwealth government bond. ANZ, RBC Capital Markets and TD Securities are joint lead managers.
After hopefully overcoming the worst of the COVID-19 pandemic, the Australian securitisation industry is taking stock of a period of resilience and a reshaped competitive landscape. Top of mind for market participants are the way crisis response has changed the cost of funding unevenly for different issuer types and mooted changes to responsible-lending rules.
Australia’s credit market has seen a pickup in supply of capital instruments, including a clutch of corporate hybrid transactions. The KangaNews Debt Capial Markets Summit 2020 webinar series included a session on additional capital, which focused on supply dynamics, demand drivers and the ever-present tension between retail, wholesale and true institutional participation.
The development of long-dated liquidity is a massive agenda item for the Australian debt market, as sovereign issuance soars and yield at the front end stays anchored. Local and global market participants shared views on how duration has evolved internationally and what might be in store for Australia, at a November KangaNews Debt Capital Markets Summit 2020 webinar.
Deal activity in the Australian market slowed to a trickle in the week prior to Christmas, with only International Finance Corporation printing two Kangaroo taps. KangaNews thanks its subscribers for their support in 2020 and will return in the first week of 2021.
Canberra Metro executed Australia’s first green loan for a public-private partnership (PPP) with a refinancing of Canberra’s electric light-rail system. Deal sources say the loan is not structurally unique from other certified green loans, but the application of labelled green finance to PPPs potentially opens a large pipeline of opportunities for banks and investors that are increasingly focused on green assets.
On 18 December, Australian Office of Financial Management (AOFM) (AAA/Aaa/AAA) revised down its planned issuance for the 2020/21 financial year to A$230 billion (US$175.4 billion) from A$240 billion, following the release of the federal government’s mid-year economic and fiscal outlook one day earlier.
On 16 December, executives at KfW Bankengruppe reviewed the 2020 funding year and shared their expectations for capital markets issuance to fund promotional activities in the year ahead. While recognising that investors are increasingly looking at issuer-level sustainability credentials, and working to enhance these, KfW also expects increased issuance of green bonds in 2021.