KangaNews and RBC Capital Markets held their annual roundtable for heads of funding at Australia’s big-four banks at a fascinating juncture for the sector. Limited credit growth and highly supportive demand conditions are clearly assisting the funding task in the near term. The requirement to build much bigger tier-two debt books and the ever-present threat of volatility pose medium-term – but manageable – challenges.
On 23 March, KangaNews hosted a live dial-in featuring some of the leading market economists covering Australia. It was the same illustrious panel that was to be a highlight of the KangaNews Debt Capital Markets Summit – which had been scheduled for the same day. In a rapidly changing world, the economists provided insight into a unique and vast, but practically unquantifiable, risk.
A tight cross-currency basis swap at the start of 2020 is limiting the opportunities that usually exist for offshore borrowers in Australian dollars at the start of each year. Traders expect pressures in short- and long-term funding markets to continue to influence the basis, which could pose an ongoing challenge for Kangaroo issuance.
On 20 February, KfW Bankengruppe (KfW) (AAA/Aaa) launched a minimum A$100 million (US$66.8 million) increase to its September 2026 Kangaroo bond. Indicative price guidance for the forthcoming deal is 40 basis points area over semi-quarterly swap, equivalent to 41.75 basis points area over Australian Commonwealth government bond. Pricing is expected on the day of launch, according to Nomura and RBC Capital Markets.