News
Ratings across the sovereign and subsovereign sector have come under considerable strain during the COVID-19 era as governments seek to ensure the health and economic wellbeing of their citizens in an environment of falling revenue. Germany’s federal state of Baden-Württemberg, and its development agency L-Bank, provide a model for managing the fallout.
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.
In mid-October, the EU embarked on a funding programme so large that European market participants say it could reshape the European market and have ripple-effect consequences for others. There is no suggestion that the supply cannot be digested by the euro market, but other issuers may adjust their funding plans around the EU’s jumbo issuance forecast.
The events of 2020 could have tested ING Bank’s commitment to building its wholesale balance sheet in Australia. Instead, says Charles Ho, the bank’s Sydney-based managing director and head of wholesale banking, it has used its sectoral expertise and strong local retail brand to grow its exposure – and prepare for a further expansion of debt-market coverage.
As well as a clutch of mainstream corporate bond deals, the New Zealand market welcomed the return of corporate green-bond issuance in September. Mercury reopened the market with the first deal in nearly a year, followed in a matter of weeks by a third green-bond transaction from Argosy Property.
As widely expected, the Reserve Bank of Australia (RBA) used its 3 November statement on monetary policy to unveil a clutch of new measures designed to support Australia’s economic recovery, including a cash-rate ‘micro cut’ and A$100 billion (US$70.5 billion) of additional government-sector bond purchases. At the same time, the statement delivered a relatively positive view on the economic trajectory.
Following its debut in the public securitisation market, Allied Credit says its unique loan-origination structure has facilitated strong growth but justified a more measured approach to public issuance than the accelerated path beaten by some other new asset-backed securities (ABS) issuers.
The final week of October produced a benchmark-size supranational Kangaroo deal - a rare sight in 2020 - from Asian Development Bank, and further Australian dollar securitisation flow. Across the Tasman Sea New Zealand Debt Management established a May 2028 line by syndication.
The Australian market saw the pricing of a pair of green-labelled, consumer-finance asset-backed securities (ABS) on the same day – 22 October – in the middle of the local securitisation market’s busiest week of the COVID-19 era. Deal sources say the execution process allowed the deals to come in the hectic week, and that the green element was additive to demand.
New Zealand Debt Management (NZDM) printed its fifth syndicated deal since the beginning of the COVID-19 pandemic on 28 October. The agency says it is settling into an issuance rhythm with record demand for bonds despite negative short-end rates.
