Four Australian issuers executed tier-two deals in the week of 17 August, reviving a subordinated debt market that had lain dormant since the onset of the COVID-19 crisis. Deal sources say demand for Australian tier-two paper is strong at home and abroad.
International Finance Corporation (IFC)’s recent foray into the Kangaroo market was the issuer's first in any currency that it has swapped to US dollar secured overnight financing rate (SOFR) instead of LIBOR. Swap participants on the deal say it is a landmark transaction in the process of alternate reference rate (ARR) transition.
Asian Development Bank (ADB) and European Investment Bank (EIB) delivered mid-January Kangaroo deals at a tenor – 10 years – that had been missing in the new-issuance market. Deal sources say Australian dollar pricing relative to core currency markets is still too wide to encourage more widespread sovereign, supranational and agency (SSA) issuance.