News
With the inclusion of a scope-three emissions target and neutral zone, deal sources argue that Cromwell Property Group’s dual-labelled sustainability-linked loan and green loan stands out from what has been done before. In particular, the structure further tightens the link between the borrower’s corporate objectives and its financing.
Lead managers on Banco Santander’s first-ever tier-two deal in the Kangaroo market highlight “insatiable” demand for the asset class, suggesting interest should be strong enough to support follow-on supply. The domestic real-money bid came through for Santander, facilitating a significant price compression and notable performance on the break.
A blockbuster book driven by offshore demand – and significant growth in the qualifying asset book – enabled CPP Investments to double the size of its first Kangaroo green bond in its second foray into the sector. Market dynamics made relatively short tenor the best option for the issuer, which in turn dictated the international skew of the orderbook.
The 2024 iteration of the KangaNews Fixed Income Trading and Research Poll marks a significant change in the landscape of market support. A new bank has risen to the top of the research landscape, while the results overall show much more volatility in outcome than has typically been the case.
Market participants say the value of Australia’s sustainable finance roadmap – released by federal Treasury on 19 June – is not discovering new ground but providing direction by tying existing strands of work together in a tangible timeline. The main benefit is clarity on the direction of travel and guidance on key actions and next steps, including who will be doing what and an eye to future policy direction.
Investors enthusiastically lapped up the first covered-bond deal from an Australian major bank this year. Westpac Banking Corporation and its leads say the issuer paid no concession to its outstanding curve and was able to upsize the deal by £500 million despite tightening the margin.
An evolution in the way nonresidential RMBS deals are structured is improving the economics of this product offering for issuers, deal sources agree. Alongside relative value, and other driving factors, dealers believe this is supporting deal flow in this recently active niche area of Australian securitisation.
Australian dollar corporate issuance may have eased since May but one of the more recent issuers – ConnectEast Finance – says the strength and competitiveness of the market are undiminished over the past six months. The issuer also reveals some encouraging developments in its investor base following its market return.
Relative value helped garner South Australian Government Financing Authority an oversubscribed orderbook in the second syndicated transaction it has issued as a sustainability bond. The issuer says demand was sticky even after price revisions, making allocations one of the more challenging aspects of the execution process.
National Australia Bank reignited big four residential mortgage-backed securities issuance late in H1 with a tightly-priced, upsized A$2 billion deal. Securitisation issuers continue to achieve decent size despite spread compression across the sector dampening volumes after a record period of new issuance in Australia.
Firstmac says its return to green residential mortgage-backed securities issuance – its second such deal, a private placement like the first – represents a step forward for the asset class in Australia. The green notes in the new deal are backed by mortgage collateral that requires homeowners to reduce their properties’ carbon emissions rather than using building standards as a proxy for emissions.
UDC Finance’s latest trade attracted four new investors enter the book even though volume was capped at a significantly lower level than its previous deal. Demand and pricing were robust, the issuer says, despite an economic backdrop that seems set to limit securitisation flow in the medium term.