News
In the wake of the first nonbank securitisation deal of 2018, issued by Bluestone Group (Bluestone) on 20 February, issuer and lead managers insist investor appetite remain robust. They say that after a bumper year of issuance in 2017, the sector is primed to build on last year’s momentum.
The Kauri market is showing signs of building on the positive start achieved by supranational, sovereign and agency (SSA) issuers in 2018. Market sources also say a favourable move in the New Zealand dollar basis swap has improved Kauri economics for euro-denominated issuers such as KfW Bankengruppe (KfW).
The Australian Office of Financial Management (AOFM) completed its 11th and final residential mortgage-backed securities (RMBS) divestment auction on 22 February, with the securities sold representing the remainder of the portfolio. The total amortised face value sold was A$312.8 million (US$244 million) from five tranches originally issued by Bendigo and Adelaide Bank, ING and ME Bank.
On 14 February, ANZ Banking Group (ANZ) issued the first-ever bond from an Australian bank to be tied to the UN Sustainable Development Goals (SDGs), the first such deal ever in the euro market and just the second from any bank globally. KangaNews spoke to deal sources about the demand drivers, the bank’s own motivations and the shape of market evolution.
Data on the maturity volume for various sectors of the Australian and New Zealand debt markets may provide only limited clues as to forthcoming issuance patterns, but it does shine a light on market development. In particular, issuance has tended to exceed maturities in most Australian dollar credit asset classes while New Zealand supply has lagged redemptions of late.
AusNet Services (AusNet)’s debut deal for 2018 demonstrates the long-dated demand uncovered in 2017 was not simply a trend while conditions were favourable, deal sources argue. Demand, and AusNet’s final outcome, were robust despite broader market uncertainty.
National Australia Bank (NAB)’s first capital-relief residential mortgage-backed securities (RMBS) deal to price since the financial crisis – and the first RMBS from any issuer in Australia to contain certified green notes – achieved oversubscription across its structure and tight-end-of-guidance pricing despite coming to market in a period of renewed equity-market volatility, the issuer says.
The final part of KangaNews’s exclusive Australasian government-sector issuers roundtable covers the specifics of funding plans – including the outlook for foreign-currency, floating-rate, and green and social securities.
In January 2018, KangaNews invited representatives of Australia’s biggest government-sector funders to a roundtable discussion in Sydney. In the first part of the discussion, the issuers shared insights into the global funding environment, global investor demand and their own ambitions with respect to curve duration.
The New Zealand government-sector bond market is well placed going into 2018, issuers tell KangaNews. A positive economic story and projected lower issuance from the sovereign should support a solid supply-demand dynamic – though issuers say they continue to work hard at investor engagement at home and abroad.
The fact that Australian dollar credit issuance slowed around February’s equity-market correction should not be interpreted as a sign of a market taking flight, intermediaries say. Many issuers are comfortably funded after a busy end to 2017 and January 2018, allowing them to wait until the dust settles on the latest market move. Credit spreads, meanwhile, suggest rationality reigns.
Lead managers say World Bank’s A$500 million (US$393.3 million) August 2028 Kangaroo print on 6 February was largely unaffected by the challenging backdrop which emerged after launch. However, while World Bank’s price and volume held up, renewed volatility is likely to keep other borrowers on pause – aided in part by the active start to the issuance year.