News
The Australian Office of Financial Management (AOFM) revealed on 8 July that the pause on inviting investment proposals for its Australian Business Securitisation Fund (ABSF) will remain in place for the time being. It says the fund was designed “as primarily an exercise in market development” but the process of achieving this development is on hiatus and therefore the AOFM will not progress with further ABSF investments.
The Australian dollar corporate debt market finished the first half of 2020 with a flurry of deals and greatly improved sentiment. Corporate originators do not expect the floodgates of issuance to open in the second half but say conditions should be supportive for active issuers.
Increased issuance from the AOFM – including targeting maturities of 3-5 and 10-12 years – and the Reserve Bank of Australia (RBA)’s intervention in the Australian sovereign bond market have accelerated Australian Securities Exchange (ASX) thinking about a new contract in its bond futures suite. The exchange is planning to introduce a new five-year contract by the end of the year.
On 3 July, the Australian Office of Financial Management (AOFM) gave issuance guidance for the 2020/21 financial year, which will apply until the Federal government budget is handed down in October 2020. There is no formal overall volume stipulated, but the AOFM expects to continue to tender Treasury bonds at a rate of A$4-5 billion (US$2.8-3.5 billion) most weeks.
Bluestone Group continued the steady flow of securitisation deals coming to market with a new residential mortgage-backed securities (RMBS) deal on 30 June. The borrower says government intervention paved its path to market and is allowing the nonbank lender to continue originating and securitising prime and near-prime mortgages.
Airports around the world have gone quiet as result of COVID-19, bringing corporate liquidity to the fore. Brisbane Airport Corporation was able to re-engage the Australian domestic market in late June for a deal it was looking to execute prior to the crisis. The airport’s head of corporate finance, Warren Briggs, speaks with KangaNews about the deal process and crisis management.
Growing subscription from community housing providers (CHPs) to National Housing Finance and Investment Corporation (NHFIC)’s programme led to the agency’s largest social bond to date.
Kauri issuance rebounded in May-June as more than NZ$2.6 billion (US$1.7 billion) priced, including a rare 10-year transaction of record volume for the tenor. Technical demand drivers are at play but intermediaries suggest positive conditions could remain even as a supply gap closes in the second half of 2020.
Despite the impact of COVID-19 on the commercial property market, deal sources say RedZed Lending Solutions’ inaugural commercial mortgage-backed securities (CMBS) transaction was welcomed by investors in an improving environment for securitisation issuance.
Primary market functionality in Australian securitisation is much closer to normal than might have been expected including an orderly flow of deals in the past month, market sources say. Investor sentiment is improving even as the wider impact of COVID-19 on the Australian economy becomes apparent.
New Zealand Debt Management (NZDM) says its latest, record-breaking syndication had a more straightforward execution process than its previous deal, which came closer to the beginning of the COVID-19 crisis. A clearer sovereign funding picture and ongoing central bank intervention paved the way for jumbo volume despite ongoing economic uncertainty and market volatility.
South Australian Government Financing Authority (SAFA) has continued in its quest to mould the Australian overnight index average (AONIA)-linked issuance market, introducing longer tenor and larger volume. The market environment has changed markedly in the last few months, including for AONIA, but the issuer says engagement continues to grow.