A global view on an evolving market and the road ahead

TD Bank’s Toronto-based vice president, investor relations and enterprise decision support, Brooke Hales, has a raft of experience across a wide range of areas within banking and capital markets. With a brief that now takes in investor relations for a globally relevant bank, Hales talks to KangaNews about her career journey, funding and investor relations in a newly challenging market, as well as her perspective on industry diversity and the shared experience of Australian and Canadian banks in sustainable finance.

It would be interesting to hear your thoughts on investor relations in 2022 and beyond. During the pandemic there was lots of talk about roadshows and investor relations in general remaining much more virtual even after border restrictions were lifted. What is TD Bank’s approach and why? Is it a case of ‘back to 2019’ or are there lasting changes?

We have been excited to get back on the road and meet with investors face-to-face. We appreciate the opportunity to continue to deepen our relationships with these key stakeholders. But we are also incorporating the lessons learned during the pandemic and continue to host some virtual meetings. The virtual format enables us to engage with a wider set of investors than we would be able to meet with in person.

In 2022, TD did the largest-ever deal by a Canadian bank in the Australian dollar market: a A$2.4 billion (US$1.6 billion) covered bond. We have also seen progressively larger domestic deals being done by Australian banks, for which A$4-5 billion is now regularly achieved. Do you have a sense of why this has been possible in such a challenged year, and does it influence the place of Australian dollars in TD’s funding strategy going forward?

As yields have risen and spreads have widened, investors have focused much more on investment opportunities that they consider to be liquid and safe, and there has been much greater differentiation about the credits and formats in which to participate. In the Australian dollar market we have seen this translate into more homogenous supply skewed heavily to the bestin- class financial issuers. When these issuers have accessed the market, their deals have often become ‘liquidity events’ for investors.

Market volatility has also been present throughout the year, resulting in narrower execution windows. As a result of these compressed windows, issuers that have responded to investor feedback and accessed the market with strong execution discipline have also been rewarded.

“The hot topics shift around – this is part of what makes my investor relations role so exciting. Right now, global investors are keen to discuss the Canadian economy, including the outlook for inflation, rates and the housing market.”

BROOKE HALES TD BANK

The mantra of 2022 in capital markets seems to have been a search for ‘certainty’, specifically on terminal cash rates. As we close the year, there appears to be a little more confidence in evidence – but this would not be the first false dawn of recent months. What is your read on confidence and liquidity worldwide, and how is ongoing skittishness influencing funding strategy?

The current market backdrop is a great example of the strong tailwinds on the back of the recent shift in sentiment on policy and rate hikes. As investor confidence has improved going into December, a number of issuers have brought forward their funding plans to take advantage of market conditions. This said, in more volatile periods, issuers have at times been price takers with investors holding more leverage. Effectively, issuers have had to take a much more nimble and flexible approach to funding markets.

Australian banks are often placed in a peer group with Canadian banks in international capital markets. What do global investors focus on when looking at the Canadian sector? What are the most common investor questions and concerns?

The hot topics shift around – this is part of what makes my investor relations role so exciting. Right now, global investors are keen to discuss the Canadian economy, including the outlook for inflation, rates and the housing market. Because TD has a large presence in Canada and the US, investors often ask TD for insights from a broader North American perspective, including where we see similarities and differences across our markets.

How much focus is there from global investors on TD and the resources sector? One of the balancing acts Australian banks are dealing with is between pressure to decarbonise their portfolios as quickly as possible and the desire to support clients’ legitimate transition. What kinds of conversations do you have with global investors about this dichotomy – and is the message resonating?

At TD, we recognise that climate change is an urgent environmental and business challenge that requires global and local action. TD is taking steps to support the effort to transition our economies to a low-carbon world – including support to our customers as they adapt their businesses.

We have set clear, long-term goals, through our Climate Action Plan and recently announced additional interim targets. We have also established a dedicated team within TD Securities to help clients with advice and financing as they transition their businesses toward a low-carbon economy.

Labelled environmental, social and governance, and sustainability-linked, issuance does not seem to be a priority for banks globally – certainly only a very small proportion of Australian bank wholesale issuance comes in labelled format. What are TD’s aspirations in this space?

TD is a leader in green and sustainable bond issuance. In 2014, it issued a C$500 million (US$373.4 million) green bond that was the first from a Canadian commercial bank. In 2017, TD issued a US$1 billion green bond that was upsized from US$500 million. In 2020, TD issued a US$500 million sustainability bond that was the first-ever sustainability bond in SOFR [secured overnight financing rate] format.

TD is a proud member of the Green Bond Principles, the Social Bond Principles and the Sustainability Bond Guidelines and is an active participant in a number of International Capital Market Association working groups. The bank is focused on supporting the continued development of the sustainable bond market.

This year’s KangaNews Women in Capital Markets Yearbook features coverage of our latest survey of Australian market professionals. Women responding to the survey suggest the market has made marginal progress in gender diversity over their careers: 54 per cent say the situation has improved “somewhat” but only 10 per cent “significantly”. Without asking you to speak for the whole industry, would you like to share a view on progress over your time working in markets?

I have been so fortunate in my career to have been supported by colleagues and mentors from many different areas across TD. Diversity and inclusion have been a strategic priority for TD for more than a decade, and I have felt this commitment throughout my career at the bank. I am focused on paying it forward to my colleagues at the bank so we can continue to make progress and foster an inclusive corporate culture.

Over a shorter time horizon, 25 per cent of survey respondents say “a moderate amount” of progress has been made on diversity in the past two years, 6 per cent “a great deal”, 44 per cent “a little” and 18 per cent “none at all”. Do you believe the pandemic has changed working conditions and attitudes to work-life balance in a lasting way?

The pandemic has opened us up to some new ways of working and increased our appetite for flexibility in terms of working from locations other than the office. But I also think it was a reminder of how important collaboration is and how much being with our teams contributes to our enjoyment of work. In the coming years, I hope we will continue the dialogue and coalesce around work models that promote both flexibility and strong collaboration.