News
Lead managers say Australian Rail Track Corporation (ARTC) and Queensland Motorways (QM) were drawn back to the domestic market for new 10-year deals by reverse investor enquiry for the tenor, from different sources. Both issuers initially placed shorter-duration deals before rapidly returning for 10-year money.
Analysts believe new steps announced by the Australian Prudential Regulation Authority (APRA) as a means to "reinforce sound residential mortgage lending practices" represent a combined regulatory effort. Indeed, earlier this year the Reserve Bank of Australia (RBA) flagged its preference for macroprudential-type tools to be used, if at all, by the prudential supervisor rather than the reserve bank.
The final report of Australia's financial system inquiry (FSI) takes a clear stand against a number of elements of the country's tax policy which it believes distort the "efficient market allocation of financial resources" – including several which disadvantage the bond market. It also makes a case against tax policies which incentivise investment in equity, and in property on a "leveraged and speculative" basis.
Recommendations made by the final report of Australia's financial system inquiry (FSI) could mean a significant additional capital requirement on all Australian banks. Although the report acknowledges the difficulty in comparing capital between global regulatory jurisdictions, its "plausible range" for the recent CET1 levels of Australia's big four starts 2.2 per cent below the global 75th percentile mark the FSI sets as a benchmark.
The long-awaited final report of Australia's financial system inquiry (FSI), published on December 7, contains a number of recommendations which – if adopted – promise to reimagine the way Australia's superannuation system provides income in retirement. These, in turn, could reshape asset-allocation dynamics in Australia in favour of income-providing products.
The development demand for green assets by Australian real-money funds allowed National Australia Bank (NAB) to achieve its goal of debuting as a green-bond issuer in the domestic market. As with Australia's only previous green-bond deal, NAB achieved investor diversity in its book at pricing in line with the issuer's outstanding, non-green bonds.
Deal flow picked up heading into December, particularly in the Australian market which saw seven deals price. Australian Rail Track Corporation issued five- and 10-year deals during the week under review, while Queensland Motorways also found some 10-year demand after it debuted in the market at seven years on November 27.
Australia Rail Track Corporation (ARTC) (Aa2) became the second corporate issuer in quick succession to launch two domestic transactions in quick succession, as it launched and priced a new 10-year senior unsecured domestic deal on December 5.
Sun Group Finance (Sun Group) (BBB+), the borrowing entity of Queensland Motorways, priced a new 10-year floating-rate note in the domestic market on December 5. The issuer is seeking minimum volume of A$125 million (US$104.8 million) with indicative pricing guidance in the area of 190 basis points over bank bills.
National Australia Bank (NAB) (AA-/Aa2/AA-) launched and priced its first ever green bond transaction on December 4, in the form of a seven-year transaction "certified in compliance with international climate bonds standards". This is the first green-bond issued by an Australian company in the domestic market.