In 2017, KangaNews and Mizuho Securities hosted their first-ever roundtable discussion in Tokyo for Japanese investors in Australian dollar debt. A year later, a larger group of buy-side participants explain that, while the headwinds facing international participants in the Australian market are real, they are if anything engaged with a wider range of product than ever before.
The Australian market, along with the rest of the world, has paused to take stock of the escalating COVID-19 outbreak. As of 3 March – and in the wake of a Reserve Bank of Australia (RBA) rate cut – credit market participants say it is too early to draw firm conclusions about the long-term effect but they have a degree of confidence that the Australian dollar market can stabilise.
Emirates NBD Bank and First Abu Dhabi Bank (FAB) returned to Australian dollar issuance in February after long absences. Deal sources say market conditions were conducive despite basis-swap headwinds earlier in the year.
While true corporate deals in the Australian market last year did not reach the heights of 2017, a second-half resurgence brought record volume from triple-B issuers and hints that extended duration is on the cards once more. The question is whether the corporate space will continue to grow in 2020 or lose momentum as it did in 2018.
On 21 February, BNG Bank (AAA/Aaa/AAA) launched a minimum A$25 million (US$16.5 million) increase to its July 2028 Kangaroo bond. Indicative price guidance for the forthcoming transaction is 50 basis points area over semi-quarterly swap, equivalent to 48.25 basis points area over Australian Commonwealth government bond. Pricing is expected on the day of launch, according to Mizuho Securities.