Queensland Treasury Corporation
Some of the most important and fundamental driving forces in the fixed-income market are changing as the world moves from ever-increasing liquidity to a more restrictive outlook and policy approach. Participants at the annual ANZ-KangaNews fixed income trading and liquidity roundtable discuss global trends, local relative value, the return of the term premium and the potential shift of market norms that have prevailed for two decades or more.
The annual roundtable for Australia’s leading government-sector borrowers, hosted by KangaNews and Westpac Institutional Bank in July, found the issuers in buoyant mood. They have been able to shake off market volatility and economic uncertainty to deliver positive funding outcomes – while the semi-government sector in particular may have hit a new level of liquidity and global relevance.
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.
Australia’s three largest state government bond issuers have all been active in the green, social and sustainability market for at least half a decade, while another peer joined their ranks in 2023 and the sovereign is preparing for a green-bond debut in calendar 2024. Frameworks, programmes and issuance approaches have not been static, however, as issuers seek to meet evolving investor needs and expectations.
Queensland Treasury Corporation (QTC) has lowered its term funding requirement by A$3 billion (US$2 billion) for the 2023/24 financial year, according to an announcement following the Queensland state budget on 13 June.
Conversations at the KangaNews Debt Capital Market Summit, which took place in Sydney on 20 March, naturally focused on the fallout from bank collapses that immediately preceded the event. The overall view was that relatively positive conditions in the fixed-income market would be reshaped but perhaps not fundamentally weakened by the emerging developments.