News

The cost of funding in Australian dollars is well inside other options at present, including US private placement (USPP). So says Victoria Power Networks (VPN)’s treasurer in the wake of its first domestic transaction in three-and-a-half years. A trio of factors enabled VPN to achieve record-breaking pricing.

New Zealand’s investment landscape has seen a step change in the use of screening over the past year according to the findings of a report published by Responsible Investment Association Australasia (RIAA). “Consumer demand combined with media and political pressure in 2016” sparked 2,500 per cent year-on-year growth in “core” or screened assets under management, to NZ$42.7 billion (US$31.2 billion).

The debut Kangaroo transaction issued by Verizon Communications (Verizon) highlights the increasingly productive state of the Australian dollar corporate bond market and its international competitiveness, market users say. Verizon elected to debut in Australia off a local programme, maximising the scale of its deal without compromising on relative pricing.

In the wake of New Zealand’s first-ever green bond, the deal’s issuer and arranger express optimism around the development of socially responsible investment (SRI) locally. In particular, they highlight a change in the nature of conversations market participants are having about the emerging asset class as a sign of burgeoning demand.

In the wake of two – one domestic and one offshore – senior-unsecured deals issued during the month of July, Bank of New Zealand (BNZ) says lower volume of domestic issuance in recent years is offset by a greater call on foreign-currency markets in line with issuer strategy. There has been no impact on demand from a one-notch Moody’s Investors Service (Moody’s) downgrade in May 2017, the issuer insists.

Australian Catholic University (ACU)’s sustainability bond – the first for an Australian issuer and for a university anywhere in the world – is another critical step forward in building the local market for socially responsible investment (SRI), the deal’s arranger insists. The deal also underlines the domestic market’s capability, relative to other options, in providing reliable SRI funding.

Issuers and intermediaries in the high-grade Kauri market say pricing and demand fundamentals should be supportive of an improved H2 issuance outcome. Despite a slow period for new issuance of late, market users say the Kauri asset class has continued to develop in the background.

Deal sources in L-Bank’s third New Zealand dollar deal, and its first at a 10-year maturity, suggest its completion is the fruit of persistence and ongoing market engagement by the issuer. The transaction attracted robust domestic support, including one new investor to L-Bank’s bonds in any currency.

A report published on 25 July by Responsible Investment Association Australasia (RIAA) suggests that nearly half of all “professionally managed” assets in Australia were subject to some form of responsible-investment strategy in 2016. Most of this asset base is managed under what RIAA calls “broad” responsible-investment approaches, but the quickest growth is taking place in the more closely defined “core” category.

Liberty Financial (Liberty)’s latest residential mortgage-backed securities (RMBS) deal is the largest ever by this or any other Australian nonbank issuer, and the biggest nonconforming securitisation in Australia since the financial crisis. The issuer ascribes its success to the inclusion of a euro-denominated tranche and conducive market conditions.

The investor-friendly approach adopted by Banco Santander in the execution of its A$800 million (US$611.9 million), senior-nonpreferred EMTN was instrumental in the deal’s volume and bookbuild outcome, deal sources suggest. They say other offshore bank issuers are circling, based on a view of Australian dollars as a good diversification option.

The Australian Prudential Regulation Authority (APRA) published its long-awaited determination of the definition of “unquestionably strong” in relation to Australia’s big-four banks on 19 July. It also hints at a potential future move more closely to align Australian capital ratio methodology with international standards.