News

Meridian Energy’s retail green bond priced the day before the Silicon Valley Bank crisis hit newsstands. Market participants say the deal’s result provides further proof of the strength of New Zealand’s retail corporate bond market. Global primary markets have been all but shut since the shock, but Kiwi Property Group proceeded with its launch on 14 March, suggesting the New Zealand retail market is pushing ahead.

As global markets gradually come to terms with the implications of the collapse of Silicon Valley Bank, Australian market participants agree that even the world’s better regulated banking sectors – and wider credit markets – will feel ongoing negative consequences from what most believe to be an idiosyncratic risk event. The bank failure brought a promising start for credit issuance in Australia to a screeching halt and while there are hopes for rebound in due course it will likely be on a more fragile basis.

Thinktank Group took advantage of an improving securitisation market to print an upsized transaction in its first market visit of 2023 – just before the latest wave of event risk put Australian new issuance on hiatus for the near term at least. Thinktank has aspirations to price two further deals this calendar year but says its latest transaction sets it up well in an environment of slower lending growth.

In one of the last primary transactions to price in the Australian dollar market before the collapse of Silicon Valley Bank put new credit issuance on hiatus, Angle Asset Finance found interest from European and Asian investors in its latest securitisation deal. The issuer says it marketed the deal – its second ever – broadly, which helped increase size over its 2021 debut.

The NZ$4 billion volume of New Zealand Debt Management’s first syndicated transaction of calendar 2023 represents its largest deal since it was called on to fund the initial response to COVID-19 in 2020. The issuer credits offshore demand strength and a willingness to offer investors a compelling price for facilitating book and transaction volume.

Commonwealth Bank of Australia leaned on domestic investors for its latest tier-two deal, which launched and priced intraday. The issuer says investor appetite drove the deal’s unusual tenor and fixed-to-floating rate structure.

A comfortable oversubscription and price tightening greeted National Australia Bank’s return to domestic tier-two issuance on 1 March. The bank’s deal was the second domestic tier-two benchmark by a big-four bank in 2023 – the first at 10-year non-call five tenor – and achieved the tightest margin on this type of issuance since April last year.

Market participants are confident Telstra Group’s return to the Australian dollar market will be a catalyst for an issuance resurgence after a dry 2022. Deal sources note the extremely attractive price for the borrower and say the transaction’s five-year tenor is likely not the duration limit of demand in a newly buoyant market.

Increased engagement with sustainability is leading to growing awareness of greenwashing risk – the potential for environmental credentials to be overstated or misrepresented. The Australian Securities and Investments Commission is prioritising greenwashing surveillance and enforcement, supported for the first time by a more coherent policy backdrop.

Queensland Treasury Corporation says offering the first semi-government green-bond syndication of the year only increased demand for new issuance from the sector – particularly from international accounts, which bought around one-third of the deal. Bids comfortably outstripped final volume even when pricing tightened to the left end of the marketing range.

Svenska Handelsbanken printed its largest-ever Kangaroo transaction on 21 February, adding to the record volume of Kangaroo issuance at the start of the new year. The borrower says it was overwhelmed with the reception it received from investors, which led it to take more volume from the market than anticipated.

Coming off the back of difficult issuance conditions and narrow demand in 2022, the Australian securitisation market that met the new year’s first wave of deals provided more positive transaction outcomes. Investors’ willingness to put cash to work in the first two months of the year extended to the structured finance asset class, deal sources say, although there is an ongoing tone of caution about the year ahead.