Given the Kauri is a noncore market for SSA borrowers, the weighting towards the front end of the year that is evident in the Kangaroo market tends to be less consistent. Deal flow comes if and when pricing makes sense. For most of 2019, it seems pricing has not been favourable for issuers.

Having said this, International Finance Corporation (IFC) printed a NZ$600 million (US$377.4 million), five-year deal in July – the market’s first deal since early April. At the time, senior financial officer at IFC in Washington, Marcin Bill, told KangaNews that the New Zealand dollar deal priced inside five-year US dollar levels on an asset-swapped basis.

The fact remains, though, that deal flow has been stunted so far this year. The next transaction after IFC did not come until Asian Development Bank (ADB) priced a NZ$425 million, January 2023 tap on 16 August.

The rates story in New Zealand is similar to Australian dollars. A 50-basis-point cash-rate cut in August brought the official cash rate to 1 per cent and sent government bond yields plunging.

The pickup for investors in SSAs over government bonds could encourage issuance from the sector.

Following ADB’s transaction, its Manila-based treasury specialist, Anthony Ruschpler, told KangaNews that opportunities for liquid high-quality paper were emerging in New Zealand dollars as market conditions have become more challenging and investors begin a flight to quality.

Recent deal flow suggests there is the potential to tap further demand. IFC and Inter-American Development Bank followed ADB to the market in mid-August.

Yuriy Popovych, director, international fixed income, origination and syndication at TD Securities, says opportunities could well come around amid heightened global-market volatility. “With the US dollar curve pushing out, more opportunities may open in the Kauri space.”