The tier-two asset class has been a major beneficiary of growth and positive tone in Australian dollar credit over the past year and a half. Demand remains supportive, and market participants say the next phase of asset class growth may be a further uptick in supply from international banks.

Ausgrid’s first deal in the euro market since 2021 refreshed the issuer’s euro curve and also delivered landed cost of funds that the issuer believes to be approximately in line with what would have been achieved from a domestic print. With this marker now in place for Australian corporates in Europe, Ausgrid’s leads suggest follow-on supply is likely.

In November, Crédit Agricole CIB and KangaNews arranged a roundtable discussion for some of Australia’s leading corporate issuers. At the back end of a phenomenal year for local and global credit issuance, participants discussed demand, funding and execution strategy, the growing prominence of the euro and Australian dollar markets, and the changing manner in which investors are addressing sustainability. Separately, KangaNews spoke to key buy-side accounts in Asia and Europe to hear their perspective on Australian credit.

Shinhan Bank returned to Australian dollar issuance on 19 November for its first outing in the Kangaroo market since November 2022. Investors piled into the book even after leads dropped the fixed rate component of the deal, with orders finalising at seven times the deal size amid a busy week of supply for the Australian dollar financial institutions market. Deal sources note ongoing robust demand for offshore financial names domestically and out of Asia.