News
KangaNews talks to Yo Takatsuki, head of ESG research at AXA Investment Managers (AXA IM) in London, about the ground-breaking guidelines for transition bonds his firm published in June 2019. Takatsuki was instrumental in formulating the guidelines. He shares his insights into the urgency of opening up the transition pathway so carbon-intensive industries are encouraged to work towards aligning with the Paris Agreement.
The Kangaroo supranational, sovereign and agency (SSA) market has started 2019 with a trickle rather than its usual flood and intermediaries say Australian dollar pricing has been uncompetitive compared with offshore markets. They report solid fundamental demand but say a supply uptick is unlikely until there is a shift in the basis swap and pricing expectations.
Contact Energy (Contact)’s new sustainability-linked loan (SLL) incentivises improvements in areas such as corporate governance, stakeholder engagement and environmental impact. Participants in the deal believe that the SLL product will be applicable for a broad set of borrowers in New Zealand as it is elsewhere.
Westpac Banking Corporation (Westpac) executed a multitranche senior-unsecured deal and a covered-bond transaction in the US dollar market on 9 January 2020. The issuer says it received strong ongoing support as major-bank benchmark deals continue to flow freely in domestic and global markets, though the US has been the jewel in the crown.
As part of a rare and brief visit to Australia in December 2019, Marilyn Ceci, managing director and head of green bonds at J.P. Morgan in New York, met with KangaNews. Ceci does not predict that use-of-proceeds sustainable bonds will give way to general-corporate-purposes issuance with an environmental, social and governance (ESG) overlay. She views the urgency of the low-carbon-economy transition to be such that all well-considered, meaningful and deliberate steps on the sustainability path are critical.
National Australia Bank (NAB) says the increase in Australian dollar tier-two issuance has influenced the pricing equilibrium of senior paper. On 13 January, NAB printed its first domestic senior deal since the Australian Prudential Regulation Authority’s decision on local total loss-absorbing capacity (TLAC) in July 2019.
New Zealand Green Investment Finance (NZGIF) is a pillar of the government’s strategy for the environment. The fund now has the green light to deploy its NZ$100 million (US$66.5 million) of mandated funds. Wellington-based chief executive, Craig Weise, speaks with KangaNews about the green bank’s flexible strategy, long-term horizons and how it will go about crowding in private-sector investment.
Australia’s major banks have hit the ground running in 2020 with three of the big four taking funding opportunities at home and abroad by 7 January and the fourth lining up a new trade. Despite developing domestic and international crises, the borrowers say markets have maintained momentum from 2019 and investors are prepared for a busy open to the year.
The prospect of QE in Australia has loomed ever larger over the market in 2019 as the Reserve Bank of Australia (RBA) has moved into an easing cycle and the cash rate has approached the zero lower bound with little sign of a significant economic rebound. At Australian Securitisation 2019 in November, prominent Australian debt investors cast their eyes over the likelihood of Australian QE, what a local regime might look like, the potential consequences and what alternatives there are to stimulate the economy.
The New Zealand Financial Markets Authority (FMA) revealed on 13 December its decision on same-class exclusion as it relates to green, social and sustainability (GSS) bonds. It stated that while it was open to granting individual exemptions for certain transactions, as a rule, GSS bonds would not be eligible for issuance under the same-class exclusion for a vanilla bond.
ASX-listed nonrated corporate SEEK brought to market on 11 December a subordinated deal – a somewhat rare occurrence – to diversify its funding sources as it continues to grow. Despite being down the capital stack, deal sources say, investors were eager to participate in a transaction from a household name with an attractive yield.
Synlait Milk (Synlait) printed the largest unrated deal in the New Zealand market since 2011 with its inaugural transaction, KangaNews data shows. The issuer came to market to diversify its funding sources as it expands.