Online articles

• Activity review: record Australian print driven by financials

  The first half of 2022 was a record for nonsovereign Australian dollar debt issuance, the market riding out increasing headwinds to record a significant uptick in supply. Volume was driven by substantial bank new-issuance requirements and elevated semi-government funding needs, while some sectors – notably true corporate supply – were much quieter.

• Ampol goes off grid to deliver bespoke sustainability-linked hybrid

  Ampol’s latest hybrid deal features an innovative structure that integrates sustainability-linked features while keeping 50 per cent equity credit – a feat the lead manager says a rated issuer has not previously achieved. Issuer and lead say strict alignment with the Sustainability-Linked Bond Principles was not a priority as this is a bespoke transaction sold to just a few investors.

• Banks consider funding strategy as TFF maturity draws near

  The term funding facility was a sufficiently large market intervention to all but negate Australian banks’ wholesale funding requirements for around 18 months. The bill starts to come due on this vast sum of central-bank liquidity early in 2024, but while the refinancing need will elevate wholesale funding needs, market sources say it will likely not be a like-for-like replacement.

• Credit liquidity and primary market signals

  In late August, ANZ and KangaNews hosted their third annual bond trading roundtable – this year adding the perspectives of a range of spread product issuers. In a challenging year for credit pricing and liquidity, market users discussed trading conditions, emerging confidence and what secondary activity says about new-issuance prospects.

• Loans take the strain in 2022 - but for how long?

  Syndicated loan volume is up significantly on recent years, supported by the competitive pricing the bank market has offered as bond margins have beat a steady retreat for much of 2022. While loans will remain a consistent funding source and bond issuance from corporate Australia is unlikely to rebound in the near future, market sources say relative-value conditions underpinning the recent loan favouritism will not...

• New Zealand retail not chasing green – but issuers still keen

  The New Zealand corporate market provides as clear a sign as any that investor demand is often not the primary driver of borrower decisions to pursue sustainability-labelled debt issuance. While local retail investors – the most active corporate bond buyers in 2022 – may not be demanding labelled product, however, there are still plenty of signs of growing market momentum.

• New Zealand's peak may be in sight

  As the fastest mover on interest rate hikes, New Zealand is in the eyes of the world as a test case for the current monetary policy cycle. In mid-August KangaNews convened New Zealand fixed-income strategists and economists to discuss policy direction, economic impact and the shape of the local bond market at a pivotal cyclical moment.

• Paris alignment a win-win for capital allocation

  The biggest question for capital allocation in sustainable finance is how to capture externalities – most importantly the wider cost of emissions – without excessively adversely affecting performance. L-Bank acted as dual studies partner for research by graduate student David Alexander Jablonski, which finds that there may be a performance benefit from investment in a Paris Agreement-aligned portfolio.

• Risk that won't come out in the wash

  The term greenwashing was first coined in the 80s, when an environmentalist expressed frustration at the hotel industry promoting towel reuse as an environmental strategy when in fact it was a cost saving measure. Growth in sustainable finance, and awareness of climate change risks and impacts, means greenwashing risk management is moving from the brand team to the boardroom.

• Sovereign green bonds and mandatory reporting on the agenda as Australian climate policy revs up

  The Australian Office of Financial Management and Australian federal Treasury have been discussing what would be involved in sovereign labelled bond issuance – for instance green bonds – should the government decide to pursue this. Market sources tell KangaNews the move is part of a growing trend in Canberra toward greater receptibility to sustainable finance, as the government attempts to catch up with...

• The long road back

  While it is still hard to claim with any confidence that the bottom has been reached, at least some degree of stability seems to have returned to the Australian credit market. It will be interesting to see whether the travails of 2022 have a long-term impact on confidence in the market’s ability to provide liquidity. There are at least some reasons to hope for a relatively quick rebound, though perhaps less so in...

• Tier-two activity points to emerging stability but challenges remain

  More constructive new-issuance conditions persuaded ANZ Banking Group, National Australia Bank and Westpac Banking Corporation to return to tier-two issuance in late July and early August. Deal margins show a stark repricing over recent months but the issuers say demand was there for their domestic and US dollar prints.