Latest News
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.
There is no shortage of options for companies to sign up to as a means of demonstrating their sustainability credentials. Choosing the most relevant ones is important – and the Task Force on Climate-Related Financial Disclosures (TCFD) is front and centre for Commonwealth Bank of Australia (CommBank).
BNG Bank priced its first-ever renewable-energy Kangaroo bond on 23 January, with reverse enquiry from a Japanese investor spurring the transaction. Deal sources say the specific use of proceeds linked to the deal strikes a chord with a specific type of investor, granting the issuer access to long-dated Australian dollar funding.
Australia is experiencing growing prevalence of environmental, social and governance (ESG) aspects to the funds-management mandate process. Investors say winning such mandates cannot just be a matter of responding to clients’ requirements on a case-by-case basis but demands a strong holistic approach.
Australian investors are largely comfortable with the integrity of reporting on green bonds. They are, however, paying close attention to the wider context of assets being funded by green issuance – and are not prepared to take any label purely at face value.
Westpac Banking Corporation (Westpac) can lay a claim to Australia’s longest-standing relationship between a financial institution and sustainable behaviour. It is seeking to build on the ties in the modern era.
National Australia Bank (NAB) is Australia’s most diverse issuer of labelled bonds, including in green, social and sustainable development goal (SDG) format. Issuing a wide range of such product brings its
own challenges.
Green-bond markets in global jurisdictions are moving towards formally established taxonomies or definitional regimes. Australian market participants recognise the value of harmonisation but still have some doubts.
Australian market participants see reasons for optimism about the evolution of local sustainable capital markets. They are looking for a range of developments in 2019.
Increased product recognition helped International Finance Corporation (IFC) more than double the outstanding volume of its Kangaroo social bond via the first tap of this line, which priced on 10 January. Deal sources say social bonds are starting to be viewed under the same socially responsible investment (SRI) criteria as green bonds, thus bringing in a broader range of investors.
Kangaroo deal flow in benchmark volume started coming through on 8 January, when Asian Development Bank (ADB) priced a A$1 billion (US$718 million), five-year green bond. Despite ongoing headwinds for supranational, sovereign and agency (SSA) issuance in Australian dollars, the deal achieved record volume based, deal sources say, on the boost the year’s first issuer typically receives, improving technical factors and the green overlay.
Australia’s banking royal commission and the sluggish state of corporate capex seem likely to shape the future of domestic credit at retail and institutional level. Neither factor points to a major supply uptick.