News

The 2023 iteration of the Fitch Ratings-KangaNews Fixed-Income Investor Sentiment Survey came at a major inflection point for credit and rates product, as investors provided responses in late March and early April – shortly after bank failures rocked global markets. The survey response suggests investors are more concerned about what these events portend for economies and markets than the direct risk of contagion.

Australian corporate borrowers have every reason to favour debt capital markets over bank loans for their funding needs in 2023. Risk events and the economic outlook mean caution remains the order of the day domestically, however, and while deal flow is likely to pick up market participants acknowledge that global options are providing strong competition.

Stockland Trust says it achieved what it set out to in its first domestic primary transaction since March 2021. The seven-year deal met pricing and volume expectations though the borrower notes the level of oversubscription was not as high as anticipated. Deal participants say investors have money to put to work but remain cautious about the macroeconomic environment.

The Australian Office of Financial Management’s December 2034 syndication – its first bookbuilt transaction this calendar year – attracted a more than four-times oversubscribed book and broad global demand. The issuer says it was important to send a message about local capital market functionality as volatility continues to ease.

Resimac says asset managers were the main supporters of its latest nonconforming residential mortgage-backed securities offering, which priced on 13 April. The borrower says previously wary investors are showing more confidence to take part in primary market offerings as volatility continues to ease.

New Zealand Local Government Funding Agency built its Sustainable Financing Bond Framework on two asset types: use-of-proceeds and sustainability-linked loans to local councils. The issuer attracted a jumbo book to its debut transaction from the framework, even though the specifics of its programme mean its deals do not fully align with international principles and it is not using the green, social or sustainability bond labels.

Worley revived a deal process it initiated in 2022 to debut in the Australian dollar market with a sustainability-linked bond. Issuer and leads say the transaction – which attracted a primarily domestic investor base – demonstrates the underlying robustness of risk appetite in the local credit market, while also allowing the issuer to enhance its own sustainability targets.

The write-off of Credit Suisse hybrid notes has raised once more the issue of who provides additional tier-one capital to Australian banks and insurers. But market users insist hybrid investors as a group are more sophisticated than they are often given credit for, highlighting the local market’s relatively muted response in recent weeks as a sign of its rationality.

ANZ Banking Group reopened the Australian dollar senior credit market with a jumbo transaction on 28 March, the issuer lauding the breadth and depth of support the deal received. But factors including a disrupted calendar in April and borrower needs mean issuance is unlikely to rebound to levels seen at the start of the year – especially as event risk remains elevated.

Following the settlement of its inaugural euro benchmark – which was also its second-ever green-bond transaction – NBN Co says issuing in a new jurisdiction should help refresh its global curve including a pricing impact in the US dollar market. The early signs were positive as the euro deal priced inside NBN’s US dollar bonds with a diverse book.

The Australian Sustainable Finance Institute published the final recommendations report for the forthcoming local sustainable finance taxonomy on 27 March, lauding “broad consensus across the finance sector, industry, civil society and real economy actors” on its key design elements. The main evolution of the taxonomy during its design phase is greater demand that the document should be flexible to accommodate future priorities.

The KangaNews Market People of the Year were revealed at the KangaNews Awards Gala Dinner on 21 March. These are the individuals who voters in the KangaNews Awards 2022 believe went above and beyond their roles to contribute to the development of the Australian and New Zealand debt markets. There are no restrictions on the firms, positions or seniority of winners – voters are simply asked to consider who contributed most to the market in either or both 2022 specifically or across the span of a career.