News
The Australian major bank credit market reopened with a bang on 27 October after another low-supply period. Commonwealth Bank of Australia priced a A$2 billion (US$1.3 billion) tier-two trade followed a few hours later by ANZ Banking Group pricing a A$4.75 billion senior offering.
Inflation, interest rate increases and geopolitical risks have changed corporate Australia and New Zealand’s view on debt capital markets, according to the 2022 KangaNews-Moody’s Investors Service Corporate Borrowers’ Intentions Survey. The findings highlight a shift in the funding mix as borrowers turn to safe harbours in response to and anticipation of more troubled times.
Financial Kangaroo issuance – particularly from Canadian and European borrowers – has rebounded in 2022. Coöperatieve Rabobank recently joined the fray, noting that the Australian dollar market offered volume it was seeking for tier-two capital issuance at a sound price.
Scoring and pricing sovereign borrowers on the basis of environmental, social and governance performance could have a greater impact on global sustainability than anything else capital markets can hope to achieve. But sovereign debt is the least developed major global asset class when it comes to integrating sustainability factors.
The Australian Sustainable Finance Institute has completed the international framing study that forms a significant part of the groundwork for the forthcoming Australian sustainable finance taxonomy. The resulting report – Analysis of International Taxonomies and Considerations for Australia – published on 17 October, sets out some principles for what a taxonomy should aim to achieve based on global experiences.
Avanti Finance’s latest residential mortgage-backed securities transaction maintains its pattern of being in the public structured finance market on an annual basis. The borrower says KiwiSaver funds’ comfort with the asset class continues to grow despite the obvious headwinds.
Flexibility on pricing helped Treasury Corporation of Victoria entice real-money investors to join the bank bid for its latest syndicated transaction, the issuer says. The deal completes the build-out of the state’s maturity curve to 2037 and market conditions will dictate future issuance duration.
Auckland Airport says wholesale investors appreciated the short duration of its latest bond deal, a three-year floating rate note . The issuer plans to increase its borrowing programme in future – it is targeting issuance of NZ$500-NZ$800 million a year – and also has a sustainability framework in development.
Attention in 2022 has turned to the undeniable challenges the credit market is facing – perhaps most notably higher rates and cost of living, and pressure on the funding side. But Australia’s leading nonbank lenders – speaking at a roundtable discussion hosted by KangaNews and Natixis – say the new environment carries opportunities for growth.
Contact Energy says retail investors anchored its latest trade, attracted by the yield on offer as well as the issuer’s decarbonisation story. The support of an investor base that primarily tracks outright yield allowed the issuer to print in an otherwise volatile market.
Between the last week of August and late September, 11 new public securitisation deals printed in the Australian market. Market participants say stable pricing and competitive margins – particularly for senior notes – has drawn previously sidelined investors back to the market, including increased interest from offshore.
Pact Group has converted nearly half its debt to sustainability-linked loan format as the packaging company seeks to embed its environmental, social and governance ambitions in its business operations. Deal sources say the new facility is the first loan to an Australian manufacturer featuring a sustainability-linked overlay and shows even hard-to-abate sectors can seize the opportunity to drive change through financing structures.