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The third week of April was relatively quiet for new issuance in the lead up to the Easter long weekend. On the Australian domestic front, Downer Group Finance printed a seven-year, A$300 million (US$215.5 million) deal and Bank of Queensland issued a three-year, A$500 million floating-rate note. Resimac priced a NZ$250 million (US$168 million) residential mortgage-backed securities (RMBS) deal in New Zealand.
In the wake of its latest New Zealand residential mortgage-backed securities (RMBS) deal, Resimac says structural changes in the local mortgage market are opening opportunities for nonbanks in prime mortgage lending and, therefore, securitisation. The issuer also says the depth and breadth of bids for its paper broadened in the new transaction.
The future of interbank offered rates (IBORs) is under question globally. While Australia’s rate appears to stand a better chance of survival than many of its global peers, local market participants cannot afford to be complacent in a rapidly evolving environment. IBOR transition was explored in depth at the KangaNews Debt Capital Markets Summit 2019, including in a panel discussion featuring leading local and international experts.
Approaching the end of the first quarter of 2019, most Australian economists had shelved expectations of higher rates and in many cases replaced them with predictions of further cuts in the coming months. The KangaNews Debt Capital Markets Summit 2019 brought together a panel of the country’s top economic commentators to delve into the issues at play.
Downer Group Finance (Downer) priced its first Australian dollar deal since 2015 on 15 April. Issuer and leads say significant developments in Downer’s business composition opened the deal up to a broader suite of investors, while prevailing market sentiment induced a rapid book build and tightened pricing.
Some market developments are both evolutionary and revolutionary. One example discussed in depth at the KangaNews Debt Capital Markets Summit 2019 is the use of distributed-ledger technology (DLT). King & Wood Mallesons is playing a central role in deploying decentralisation and Sydney-based senior associate, Max Allan, shares a progress report.
The scale of demand for Woolworths’ debut green bond – which supported a significant price revision – further demonstrates the potential of the asset class for local corporate borrowers, issuer and leads say. Demand for certified sustainable bonds could even be sufficient to put mid-curve domestic issuance on a pricing par with bank loans and thus entice more issuers to market.
On 16 April, BNG Bank (AAA/Aaa/AAA) launched a minimum A$20 million (US$14.3 million) increase to its April 2029 Kangaroo bond, via RBC Capital Markets. The forthcoming deal is being marketed at 54 basis points area over semi-quarterly swap, equivalent to 65.75 basis points area over Australian Commonwealth government bond and is expected to price on the day of launch.