News
The economy-wide impact of COVID-19 has affected Australian corporate borrowers in a host of ways. But access to funds has generally remained in place as issuers navigate a path back to some type of normality – even for those in the most affected sectors.
COVID-19 has spurred record volume of social-bond issuance and some sustainable-finance experts believe the crisis will be the catalyst for much more widespread adoption of the instrument. Despite the best efforts of advocates, however, the hurdles to habitual use of social bonds, especially in the private sector, remain high.
The Australian Office of Financial Management (AOFM) and New Zealand Debt Management (NZDM) syndicated new bond lines on the same day for the first time, on 14 July. Deal sources say targeting different parts of the curve helped both transactions proceed well.
On 16 July, Australian Financial Group (AFG) began taking indications of interest for its residential mortgage-backed securities (RMBS) deal, AFG 2020-1 Trust. The potential deal has a total indicative volume of A$350 million (US$245.1 million), and is expected to launch in the week beginning 20 July. National Australia Bank is arranger and joint lead manager alongside ANZ.
On 16 July, Resimac began taking indications of interest for its residential mortgage-backed securities (RMBS) deal, Bastille Trust Series 2020-1NC. Indicative total volume for the transaction is A$500 million (US$349.9 million), with the potential to upsize to A$1 billion. Macquarie Bank and National Australia Bank are co-arrangers and joint lead managers alongside Commonwealth Bank of Australia, Deutsche Bank and Wells Fargo Securities.
On 16 July, WSO Finance (A3/A-), the financing entity of Westlink Motorway, announced a consent solicitation process for four outstanding Australian dollar bonds. The consent is being requested in connection with the internal reorganisation of the Lendlease engineering corporate group, of which the issuer is a member.
In June, Westpac Institutional Bank and KangaNews brought together the biggest issuers in the Australian government sector to discuss a rollercoaster ride in markets since the end of March. The issuers describe a relatively straight-line improvement since the thrills and spills of the March-April period, with returning investors supporting increasing issuance volume and liquidity at extended tenor.
New Zealand’s government-sector issuers experienced market upheaval as severe as their neighbours in Australia during the height of the COVID-19 crisis in March and April. Intervention from the Reserve Bank of New Zealand (RBNZ) and an enviable pace of economic reopening have improved the outlook, but issuers at a KangaNews-Westpac roundtable in June say plenty of challenges remain to be faced.
It has been two years since Kāinga Ora – Homes and Communities re-entered debt capital markets, in which time the agency’s funding requirement and market footprint have grown significantly. Sam Direen, treasurer at Kāinga Ora in Wellington, discusses the development of the funding programme including the emphasis on sustainable debt and the impact of the COVID-19 crisis.
New Zealand Debt Management (NZDM) is facing a funding task in the coming years multiples higher than even its most active historical programmes. Kim Martin, New Zealand Treasury’s Wellington-based acting director, capital markets, discusses the solid starting position and execution plans for the coming issuance requirement.
Ares Australia Management launched its first local product, the Ares Global Credit Income Fund, on 12 May. The firm is a joint venture between Fidante Partners and Ares Management Corporation – a global alternative asset manager with US$149 billion under management. Teiki Benveniste, head of Ares Australia Management in Sydney, explains how the fund aims to achieve 3-4 per cent absolute return in an ever-lower rates environment.
Investors are adjusting to a new normal in the Australian high-grade market as conditions settle after March’s turmoil. Reserve Bank of Australia (RBA) bond purchases slowed to a halt by the mid-way point of the year, but investors say its presence is still bringing stability and creating opportunities.