News
On 6 November, Pepper Group began taking indications of interest for its residential mortgage-backed securities (RMBS) deal, PRS 28. Total capped volume for the transaction is A$750 million (US$544 million) and is expected to launch in the week beginning 9 November. National Australia Bank is arranger and joint lead manager alongside Commonwealth Bank of Australia, Macquarie Bank and Westpac Institutional Bank.
When Australia went into lockdown, transport and shipping infrastructure saw an unprecedented business shock. Airport and toll-road passenger numbers collapsed while even freight flows dropped as the global economy ground to a halt. In October, KangaNews and Westpac Institutional Bank gathered key players in the Australian sector to discuss business impact, balance-sheet resilience and the swift rebound of debt capital markets including the domestic option.
The 2020 iteration of the KangaNews-Moody’s Investors Service Corporate Borrower’s Intentions Survey highlights the response of corporate Australia and New Zealand to COVID-19. The results show treasury teams are anticipating a rocky path out of the crisis and a heightened domestic focus to their funding plans.
Australia’s private-debt market and the investors that specialise in it are not new phenomena. What is new is a headline cash rate at close to zero and the withdrawal of supply from the biggest historical source of local credit issuance – the major banks. Specialist investors say their sector is attracting more interest and inflows on the back of this changed environment.
On 6 November, Dunedin City Treasury (AA by S&P) launched an indicative NZ$60 million (US$40.6 million), six-year, secured, wholesale transaction. The forthcoming deal is being marketed at 47-52 basis points area over mid-swap and is expected to price on the day of launch. ANZ is leading.
With so much going on in the here and now, the fact that Australasian fixed-income markets have fundamentally changed in 2020 has passed almost without comment. It is time to start asking what impact massively increased sovereign-sector issuance and massively reduced bank supply will have – and whether these changes will be permanent.
On 5 November, Dunedin City Treasury (AA by S&P) mandated ANZ to engage investors regarding a potential New Zealand dollar denominated, six-year, secured, wholesale transaction.
Westpac Banking Corporation has announced plans for a perpetual non-call March 2027 additional tier-one (AT1) capital transaction, Westpac Capital Notes 7. The deal is being marketed at 340-360 basis points area over three-month bank bills with final margin to be announced on 12 November following the competition of a bookbuild.
New Zealand investors face ultra-low rates and a radically reshaped credit-supply picture. As New Zealand struggles in the wake of COVID-19 – despite having been, at least for now, effectively able to eliminate the virus locally – the domestic buy side is considering its new strategy.
Trading capability, including a willingness to deploy balance sheet to support client needs, has long been a major differentiating factor for ANZ’s all-conquering fixed-income business. A group of the bank’s traders gathered to talk about 2020 at a KangaNews roundtable, including views on the extraordinary circumstances of the year and how liquidity may be affected for some time to come.
Australia’s securitisation market has maintained deal volume at a level in line with outcomes from recent years despite massive upheaval to the supply and demand picture in 2020. In particular, bank issuers have been all-but absent this year. A particularly active September and October for new issuance kept annual volume robust.