News
Deal flow was predictably light in Australia in the shadows of end of financial year, and in the context of a midweek inflation print that surprised on the high side. A handful of small transactions priced with even less in the near-term pipeline, and total Australian dollar volume was outmatched by the single deal that priced in New Zealand – a NZ$350 million capital note from Mercury NZ.
Market participants say the value of Australia’s sustainable finance roadmap – released by federal Treasury on 19 June – is not discovering new ground but providing direction by tying existing strands of work together in a tangible timeline. The main benefit is clarity on the direction of travel and guidance on key actions and next steps, including who will be doing what and an eye to future policy direction.
Investors enthusiastically lapped up the first covered-bond deal from an Australian major bank this year. Westpac Banking Corporation and its leads say the issuer paid no concession to its outstanding curve and was able to upsize the deal by £500 million despite tightening the margin.
Sydney Airport’s largest-ever transaction in the Australian dollar market – which is also its first public domestic deal since 2011 – provides another sign of growing corporate borrower confidence in the local funding option. The chance to access extended tenor at volume in line with a global core market benchmark print clearly moved the dial for an issuer that has historically been wary of the reliability of domestic issuance.
An evolution in the way nonresidential RMBS deals are structured is improving the economics of this product offering for issuers, deal sources agree. Alongside relative value, and other driving factors, dealers believe this is supporting deal flow in this recently active niche area of Australian securitisation.
