Online articles

• Agility likely key in tier-two squeeze but big four’s task remains manageable

  The Australian Prudential Regulation Authority’s interim target for Australian major banks’ total loss-absorbing capacity is less than 18 months away, and while recent tier-two deal flow suggests liquidity is available pricing has registered a stark widening. Dealers and intermediaries say spreading the issuance net will likely be key to managing higher cost of additional capital.

• Australian credit can’t count on quant

  Quant credit trading is taking off in the US and Europe, with asset managers betting that the asset class is ripe for the same innovation that has upended equity markets over the last 20 years. Australian credit may be less fertile ground for such a rollout, but some market users are exploring the viability of using quant practices and systems to gain an edge.

• Bank Kangaroo issuance rebounds

  Financial Kangaroo issuance – particularly from Canadian and European borrowers – has rebounded in 2022. Coöperatieve Rabobank recently joined the fray, noting that the Australian dollar market offered volume it was seeking for tier-two capital issuance at a sound price.

• Corporate debt: another year of living dangerously

  The Westpac-KangaNews Corporate Debt Summit returned to Sydney as an in-person event on 20 October, at a fascinating juncture for the sector. After an unprecedented change of direction for monetary policy, painful market conditions for credit investors and a new-issuance slump, it would be easy to imagine an atmosphere of gloom. However, while acknowledging significant challenges in the near term, many speakers at...

• CPP Investments highlights improving Kangaroo tone with bumper debut

  CPP Investments defied a recently sluggish high-grade Kangaroo market to record the second highest volume of any Australian dollar print by a supranational, sovereign and agency (SSA) borrower this year. Deal sources say the transaction speaks to an improving market tone and interest in the borrower’s profile, as well as an extension in duration demand to five years.

• Debt lag

  Australia’s economy should be among the most responsive to higher cash rates given its high proportion of floating-rate mortgages and high household indebtedness. However, by late October the Reserve Bank of Australia and economists were increasingly discussing the lag in policy impact. While the data is finally starting to hint at cooling demand, the pace of rate rises and the slow reaction to them is increasing...

• New Zealand banks tack to changing conditions

  The KangaNews New Zealand Debt Capital Market Summit closed with a discussion between the treasurers of the local big-four banks, at a time when these institutions find themselves in the crucible of rising rates, soaring inflation and volatility in global funding markets. The treasurers discussed capital, funding and asset stability, and the challenges ahead.

• New Zealand on the front line in the global battle with inflation

  The Reserve Bank of New Zealand was among the first globally to begin increasing rates and its battle with inflation goes on despite a series of hikes throughout 2022. The KangaNews New Zealand Debt Capital Market Summit gathered economists from the big-four banks to discuss the monetary policy response, political currents and the state of the local economy.

• New Zealand stays at the cutting edge of market evolution

  The KangaNews New Zealand Debt Capital Market Summit returned to Auckland on 7 September, attracting a record audience as the market gathered after two years of disruption during the pandemic. The New Zealand economy is at the forefront of the global battle against inflation and its capital market is changing shape rapidly, including the all-important factor of sustainable finance. Speakers at the event reflected...

• Repricing opens issuance window for securitisation deals

  Between the last week of August and late September, 11 new public securitisation deals printed in the Australia. Market participants say stable pricing and competitive margins – particularly for senior notes – drew previously sidelined investors back to the market, including increased interest from offshore.

• Skittish issuers seek safe harbours as global conditions shift

  Inflation, interest rate increases and geopolitical risks have changed corporate Australia and New Zealand’s view on debt capital markets, according to the 2022 KangaNews-Moody’s Investors Service Corporate Borrowers’ Intentions Survey. The findings highlight a shift in the funding mix as borrowers turn to safe harbours in response to and anticipation of more troubled times.

• Social bonds seek deeper roots in Australia

  Social bonds took a step forward in prominence globally during the pandemic, but the product has never gained significant traction in Australia beyond global high-grade issuers and occasional specific-use cases. Sustainable finance experts say there is still growth potential but what these bonds should look like, what organisations should issue them and how impact is measured are all still works in progress.

• SSA Kangaroo market changes shape again as demand shifts

  The supranational, sovereign and agency Kangaroo market kicked off 2022 with a near-record first quarter but then slipped into the doldrums as fundamental and technical challenges slowed deal flow to a crawl. The sector has been through difficult times before, however, and dealers say the longer-term outlook remains healthy.

• Targets and reporting in focus as investors ratchet up ESG expectations

  KangaNews’s third annual survey of Australian and New Zealand fixed-income investors’ environmental, social and governance requirements highlights a market that is rapidly scaling up its expectations. The focus has evolved from a debate about whether issuer- or security-level considerations are more important to a general demand for more data and more quantifiable targets that can be delivered in the...