WHETTON The Asian bid has in general extended its duration and lowered its credit-rating expectations. Yield differential matters, but the bigger picture is that these investors need assets. There are life-insurance investors in Japan, Korea and Taiwan with Australian dollar policies they need to back up with assets, and they aren’t in a position to cherry pick or wait for best value. We have probably seen Asian demand slowing as rate differentials have concertinaed, but it’s not a significant drop.

DONALDSON We have seen the same thing. The reality is that Japanese government bond (JGB)-based products simply cannot be sold because they can’t deliver a positive return. While Australia might get a slightly diminished share of what’s left relative to the US or other markets – even New Zealand – the fact that the JGB aspect isn’t there means the money for alternatives is still growing. Demand for Australian dollars is still solid.

What I’m saying is that perhaps it is the relative yield to JGBs we ought to focus on. The US isn’t going to get 100 per cent of Japanese money.

WHETTON This is a positive story for supranational, sovereign and agency issuers, but even more interesting is the development of the ability of corporates to borrow Australian dollars at 10-year duration and for the semis to issue 15-, 20- and even 30-year paper.

This latter has been happening over the past year but has accelerated over the past few months. They’re small deals, but they’re being driven by an Asian bid for extended tenor in the right names. Having a 30-year AOFM bond out there is a real help.

WHETTON The banks certainly aren’t going to lend at 10 years because the regulatory capital costs are too high. Smaller borrowers would rather not go to the trouble of getting the legal work done for US dollar issuance. If they can issue Australian dollars – and it might be to a Taiwanese life-insurance company rather than to an Australian investor – they will be more than willing to do so. This development has been a major uplift for the Australian market.

GOODMAN The interesting thing is that, for the first time, domestic demand might be struggling to keep up with supply. I think this is tax-driven and based on incentives in the superannuation system. For instance, 30 per cent of our superannuation system is self-managed, and this pool is not buying bonds in large volume.

I think there is a good chance, however, that in 10 years’ time we will look back on the evolution of the corporate bond market in 2017 – and specifically the emergence of 10-year issuance – as a watershed moment.

MASTERS The opening for corporate issuers has been provided by a search for yield that sovereign issuers aren’t providing. Issuers are being overwhelmed with demand, and there is a sense that there would be a bid for almost any deal one could bring to market.

DONALDSON Corporate issuers in Australia always used to come back to the question of execution risk. The developments we have seen recently seem to have got some more borrowers over the line. But let’s not forget we are talking about a corporate bond market of A$16-17 billion (US$12.1-12.9 billion) in 2017 – it’s not much in global terms.