News
Emirates NBD Bank and First Abu Dhabi Bank (FAB) returned to Australian dollar issuance in February after long absences. Deal sources say market conditions were conducive despite basis-swap headwinds earlier in the year.
On 27 February, Avanti Finance (BB by S&P) launched a new A$25 million (US$16.4 million), no-grow, four-year transaction. Indicative price guidance for the forthcoming deal, which is expected to price on the day after launch, is 500-525 basis points area. National Australia Bank is the lead manager.
The US private placement market has arguably been the first choice for Australasian corporates’ capital-markets funding for many years. At a roundtable KangaNews and MUFG Securities hosted in Miami in January, USPP investors say they are aware that other funding options – including the Australian domestic market – are increasingly able to offer execution certainty, including at extended tenor. But they say USPPs still offer a compelling value proposition – and many Australia and New Zealand borrowers agree.
Transaction data from KangaNews’s deal database highlight a strong second half of 2019 in the Australasian credit market. Meanwhile, syndicated semi-government supply notably increased, the green, social and sustainability bond space grew significantly and New Zealand domestic issuance achieved record 12-month volume.
On 26 February, New South Wales Treasury Corporation (TCorp) (AAA/Aaa) launched a new 2% March 2033, Australian dollar denominated, syndicated, benchmark deal. Indicative price guidance for the forthcoming transaction is 68-72 basis points area over 10-year futures contract, equivalent to 59.9-63.9 basis points area over Australian Commonwealth government bond.
Financing solutions and adaptation to climate change is stoking capital-markets innovation around the world. In New Zealand, increasing forest cover is key to meeting Paris Agreement targets – and local market participants are keen to germinate a specialised financing instrument to support progress.
A limited pool of opportunities in the domestic market and the perception of better liquidity in deals priced under global documentation are causing Australian credit fund managers to consider a wider universe of Australian dollar issuance.
I cannot claim to be particularly good as a forecaster, as even a cursory glance at my online betting account will attest. Even so, the start of a new decade seems an apposite moment to make some wild predictions about developments in the global economy we might see make an impact on the global market.
On 26 February, WSO Finance (WSO), the financing entity for Westlink Motorway (A3/A-), revealed plans for a potential 10-year or longer, Australian dollar denominated transaction. Commonwealth Bank of Australia and Westpac Institutional Bank have been mandated to arrange a series of investor meetings beginning 10 March.
While true corporate deals in the Australian market last year did not reach the heights of 2017, a second-half resurgence brought record volume from triple-B issuers and hints that extended duration is on the cards once more. The question is whether the corporate space will continue to grow in 2020 or lose momentum as it did in 2018.