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Credit Agricole opened the Kangaroo market for financial institutions for 2024 with a record-breaking deal, the bank saying it chose an early-year window to secure a ‘first mover’ advantage amid a busy start for Australian dollar supply. Even so, the issuer also expressed amazement at the volume of interest in the book for its senior-preferred transaction.
Late year investor engagement and strong fundamentals helped ANZ Banking Group to gather what it believes to be the equal largest book for an Australian dollar tier-two trade. The borrower says interest in the asset class continues to grow even after a successful 2023 for subordinated debt issuance.
Westpac Banking Corporation says domestic liquidity levels and pricing are positive at the start of 2024, continuing the trend from last year. The bank kicked off issuance from domestic borrowers with a senior three- and five-year A$5.1 billion (US$3.4 billion) trade priced on 8 January.
The Australian securitisation market enjoyed a rebound year in 2023, printing record volume including an unprecedented level of collateral diversity and a notable uptick in bank issuance. It is not all plain sailing in the nonbank lender space, but origination conditions and the funding side appear to be improving.
Deals from New Zealand issuers in the Australian market revved up in a big way in 2023. There are a raft of reasons why the Kangaroo market should remain attractive to opportunistic New Zealand borrowers into 2024 – provided market fundamentals, including basis swap dynamics, are supportive.
Australian dollar corporate supply in 2023 was hampered by uncertainty amid a higher interest-rate environment and a lack of immediate funding need. This caused some issuers to hold off entirely, while others accessed more competitive offshore capital markets. But by year-end, early signs pointed to a more active 2024.
New Zealand’s capital market faced several headwinds in 2023 but managed to navigate a course to issuance consistent with recent years. A late year regulatory update could suggest smoother sailing ahead for at least one key sector, though deal flow from 2023 provides few hints at a radical change in supply or demand patterns.
New Zealand’s capital market faced several headwinds in 2023 but managed to navigate a course to issuance consistent with recent years. A late year regulatory update could suggest smoother sailing ahead for at least one key sector, though deal flow from 2023 provides few hints at a radical change in supply or demand patterns.
Australia’s sovereign and semi-government issuance market rode the waves of ongoing rates market upheaval in 2023, with issuers reporting solid demand despite myriad challenges. The sector appears to be in fundamentally good health, with semi-government issuers noting growing liquidity in their part of the market on the back of several years of elevated supply.
After back-to-back record issuance years, it is clear that increased capacity for Australian dollar financial institution bonds is not just a post-pandemic rebound but representative of at least some degree of system growth. A raft of domestic and international banks benefited in 2023, including finding ample liquidity across the capital stack.
Changing market conditions caused the supranational, sovereign and agency sector to supply more volume to the Australian dollar market in 2023 than it ever has before. Despite typical seasonal issuance patterns, demand remained robust throughout the year – including for newer names – and raised expectations for the sector’s development in 2024.
While deal flow has slowed into year-end, a brace of benchmark transactions from International Finance Corporation in the Kangaroo and Kauri markets suggests the new year could be set for a fast start. In particular, after a tough year the Kauri market shows signs of promise now there is more clarity on how supranational issuers will be treated in the local regulatory regime for bank liquid assets.