News
Investor diversification and attractive pricing conditions led to Korea Southern Power’s inaugural Kangaroo deal. Deal sources say the transaction had one of the highest onshore allocations for a Korean issuer.
The Australian Prudential Regulation Authority (APRA)’s latest update to rules covering bank additional-capital instruments could constrict liquidity in tier-two securities at the margin. Better news for the banks came from S&P Global Ratings (S&P), which has upgraded the economic component of its banking industry country risk assessment (BICRA) for Australia and with it the ratings of the big-four banks’ additional-capital securities.
A cluster of long-dated semi-government deals priced between late September and late October. Deal sources say the semi-government curve has steepened in the long end, while a significant redemption profile in the government sector has led domestic investors strongly to support deals.
While a recent clutch of 10-year deals in the Australian dollar corporate market has provided confidence that investor support can be found at tenor, United Energy Distribution (UED) opted for seven-year duration in its domestic return. The issuer says this tenor was the best match for its funding need.
End users can no longer ignore the domestic and international process of reforming benchmark rates, according to speakers at the International Swaps and Derivatives Association (ISDA)’s annual Australian conference in Sydney. The local market is less than halfway through its own transition and the main concern is lack of engagement from many issuers and investors.
DBS Bank (DBS) priced the first Kangaroo covered bond since September 2017 on 17 October. The issuer says global demand for covered bonds has been higher in 2019 than in previous years and adds that the stability of the Australian dollar market compared with other alternatives makes it particularly attractive.
The European Central Bank (ECB) confirmed another round of QE on 12 September, locking in what markets have been anticipating throughout 2019. The European political, economic and central-bank landscape is shifting but unconventional monetary policy seems set for the foreseeable future – despite questions about its efficacy in the real economy.
Consistent Australian dollar issuance, as well as further deals from its Japanese peers, resulted in significant domestic investor support for Sumitomo Mitsui Financial Group (SMFG)’s latest transaction. Deal sources say technical factors on the buy and sell side are proving supportive for global financial institution (FI) issuance in Australian dollars.
The domestic bond market has supported a steady flow of 10-year corporate deals in recent months. Dexus Finance (Dexus) is the latest corporate to have issued at this tenor domestically and the issuer says the ability consistently to price deals at the long end shifts its appetite for domestic-market deals significantly.
The H2 2019 iteration of the Fitch Ratings (Fitch)-KangaNews Australian Fixed-Income Investor Survey suggests asset managers have a relatively negative outlook on the Australian economy. Geopolitical risk is top of the agenda, while investors anticipate further monetary stimulus and a weak operating environment for local business.
La Trobe Financial tested the waters for greater volume in its latest residential mortgage-backed securities (RMBS) deal. The issuer achieved its record deal size and says improving credit quality and structural tweaks designed to meet specific demand helped increase the transaction’s appeal.
The Bank for International Settlements (BIS)’s newly-established green-bond fund aims to help central banks incorporate environmental sustainability objectives in the management of their reserves. Antipodean central banks are increasingly sounding alarm on the risks posed by climate change, but so far only the Reserve Bank of New Zealand (RBNZ) has invested in the fund.