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The Australian Prudential Regulation Authority (APRA) has hinted that its plan for the forthcoming Australian loss-absorbing capacity (ALAC) regime to be funded predominantly via tier-two instruments may not be set in stone. It remains unclear what shape the final regime will take, but more options now appear to be on the table than when plans were initially announced.
The Reserve Bank of New Zealand (RBNZ) used several parameters to establish its proposals for new bank-capital requirements. Market participants have expressed particular concern over the applicability of the Modigliani-Miller (MM) theory.
Increased capital requirements on the New Zealand majors could affect their Australian parents. Whether the Australian banks will subsidise incremental capital accumulation in New Zealand is unknown, however – as is any changed impact of more capitalised subsidiaries at group level.
If US private placements (USPPs) are Australian corporates’ preferred bond format, their core debt-funding option remains bank debt. The loan market is changing but continues to provide ample liquidity and attractive pricing.
The issuance trajectory of Germany’s federal states is price-positive, and issuers say there is no prospect of their presence in global capital markets evaporating in the foreseeable future.
The issuance trajectory of Germany’s federal states is price-positive, and issuers say there is no prospect of their presence in global capital markets evaporating in the foreseeable future.
One of the major dynamics on the issuance side for Australian government-sector issuers is the projected net new-issuance decline for the Australian sovereign. This will influence future funding strategy for the sovereign and states.
New Zealand’s local high-grade issuers are encountering divergent duration preferences within their investor bases. These include different demand patterns on- and offshore and between real-money and balance-sheet buyers.
New Zealand’s local high-grade issuers are encountering divergent duration preferences within their investor bases. These include different demand patterns on- and offshore and between real-money and balance-sheet buyers.
As a component of New Zealand offshore demand and a consistent source of support, Japan remains an important source of funding even though hedged and unhedged investors took a back seat in 2018.
Australian investors do not expect an inflation breakout. However, they say inflation-linked bonds still have a role and expect the Australian Office of Financial Management (AOFM) will continue to meet demand.
Issuers were pleasantly surprised by the strength of demand from Australian real-money accounts in 2018. Incremental bid growth for state-government bonds in the coming months could rest on converting more accounts from the sovereign sector.