CARR The domestic market has been demonstrably the most efficient in volume and pricing for many corporates through the past 6-9 months. However, relativities will ebb and flow according to a number of moving pieces, including the basis swap and outright spreads offshore.

A lot of issuers will have observed a period of relative strength over the past 6-9 months, in which the domestic market has performed well. They will now be looking to see, whenever there is a wobble in offshore markets, if the domestic option remains resilient and open. This can only be substantiated by the test of time, but certainly the experience over the last nine months suggests the domestic option is more consistent nowadays.

One specific that I think is worth noting – and it is quite curious to me – is that the offshore view of the Australian airport sector seems to be more constructive than the domestic investor view, as expressed by pricing relativity.

MUFG banks most of the airports and airlines in the region and what Michael Momdjian describes is a fairly consistent state of play. Offshore markets – whether that be euro, US 144A or USPP – would, on paper at least, deliver a more competitive outcome for the local airport sector than the Australian dollar market right now.

MANSEAU For Australian airports, one of the things we experienced in our portfolios during 2020 was a slew of amendments and waivers. This was generally a constructive process reflecting the fact that we have a longer-term view of these assets. Perhaps this applies to pricing as well.

We saw strong sponsor support for Australian airports, which was true in the US as well. In both countries, the sector entered the COVID-19 pandemic with a lot of liquidity. This played into the themes of our investing: borrowers that needed liquidity but were high quality, like airport issuers, generally had no problem getting it.

Going forward, the question for airports will be the ramp up of passengers. But everyone believes it will come eventually and we take a long-term view.

SPAETH Our view of New Zealand and Australia continues to be very positive. We like the market dynamics and the legal constructs, and find the respective government policies generally favourable. We also like the companies.

We understand last year’s undercurrents but it was disappointing to us that we did not see more volume out of the region in 2020. Even so, we can say we also understand and appreciate the importance of USPPs in the make-up of New Zealand and Australian capital markets.

We are mindful of this relationship and that these markets are tremendously positive for our clients’ asset diversification, so we take care to foster constructive engagement. We feel that the companies we have worked with, by and large, reflect this attitude as well. It is still a good symbiotic relationship.

JONES Going back to the conversation around competitiveness between the Australian and USPP markets, there was no issuance in the Australian market for almost four months during the first half of 2020. During the worst of the pandemic, when there was the most uncertainty, the Australian market was shut while the USPP market was open and active for issuers – including some that are quite cyclical.

We also take a longer-term view and look to be supportive of issuers. Often, we have known the companies for a long time because they are regular issuers into the USPP market. This is important: issuer frequency gives investors a lot of comfort because they understand from experience how management teams will respond through challenging periods.

This is one reason why pricing is probably more attractive for Australian airports in particular – simply because we know their track records. We also see the trends around how quickly domestic passenger volume recovers as well as the diversification benefits a lot of these airports have, which is not necessarily the case in other markets.

We look at each asset individually and try not to paint them all with the same brush. This is a key distinction: we take the time to evaluate each asset individually rather than just looking at a broad-based sector approach.

MOMDJIAN USPP investors are highly sophisticated and can see through a crisis. They understand our fundamentals extremely well and take a pragmatic view on credit – in fact we were able to issue 30-year USPP debt shortly after the pandemic hit our shores. When speaking with domestic investors, many questions are focused on understanding near-term performance and crystal-balling around recovery projections.

SHAW One of the benefits of the USPP market is the fact that we are able to spend more time with investors to peel back the layers and hone in on the fundamentals of a credit story. I think this is an important factor, especially during this cycle of the market.

For instance, given our experience across various assets we have seen state governments take different actions to manage the health issues related to COVID-19. The characteristics of the USPP market mean that if we were exploring the credit for one of our assets we would be able to draw out this differentiation, which is important given our experiences across various geographies.

CROSSLEY Our business is very insulated from the impacts of the pandemic. For instance, energy consumption in Melbourne CBD was down considerably over the course of the year but we are on a revenue cap so we were not materially affected. This was not a negative story for us, even though what was happening in Victoria was pretty bad.

Having said this, investor engagement continues over the course of a year – whether it is from USPP, domestic or other investors. Everyone wants to know what is happening, whether it is to do with relief packages, consumption or – as was the case early in 2020 – that assets had not been touched by the bushfires.

There is always something going on in the business. The ongoing engagement we have with investors is vital and important, and we encourage it.