Kapstream Capital
Reflect and reposition
After hopefully overcoming the worst of the COVID-19 pandemic, the Australian securitisation industry is taking stock of a period of resilience and a reshaped competitive landscape. Top of mind for market participants are the way crisis response has changed the cost of funding unevenly for different issuer types and mooted changes to responsible-lending rules.
Elevator going down: office landlords’ tougher funding task
Alarming headlines about office vacancy rates are the most visible sign of a downturn in the commercial property space. While cyclical and structural factors are weighing on the sector, though, investors and rating agencies continue to back the sound fundamentals of its Australian issuers.
The heart of the deal
One of the main factors put forward to explain why Australian true corporate issuance continues to underperform in an otherwise largely positive local credit market is suboptimal execution practice. KangaNews goes inside the deal process with parties on all sides of transactions to understand why many market users believe execution is letting the local corporate market down.
Semis take centre stage in Australian liquidity evolution
A step-change in supply dynamics has combined with positive demand factors to boost secondary turnover in Australian semi-government bonds. Local real-money investors generally agree with the suggestion that semi-government tradability has reached a new level, while bid-side liquidity is strong even for less heavily traded names.
When idiosyncratic becomes systemic: SVB and the no-fault fallout
As global markets gradually come to terms with the implications of the collapse of Silicon Valley Bank, Australian market participants agree that even the world’s better regulated banking sectors – and wider credit markets – will feel ongoing negative consequences from what most believe to be an idiosyncratic risk event. The bank failure brought a promising start for credit issuance in Australia to a screeching halt and while there are hopes for rebound in due course it will likely be on a more fragile basis.
Securitisation investors fret noncall risk
The focus of commentary in the Australian securitisation market has tended to be on borrowers’ ability to keep making loan payments as higher interest rates cut deeper into household balance sheets. But investors are also paying close attention to technical factors in the structured finance asset class, including the potential for some deals not to be called at the earliest opportunity.
