SUSTAINABLE DEBT: COVID-19 RESPONSE: MUTUAL BANKS: CORPORATE GROWTH ECONOMISTS, TRADERS FUNDING AND CAPITAL AND INNOVATION AND INVESTORS SPEAK IN THE SPOTLIGHT VOLUME 15 ISSUE 118 _ APR/MAY 2020 www.kanganews.com UNLIMITED LIQUIDITY THE FISCAL AND MONETARY RESPONSE TO COVID-19 PROVIDES CRITICAL SUPPORT TO THE AUSTRALIAN AND NEW ZEALAND ECONOMIES. MARKET PARTICIPANTS ARE WORKING THEIR WAY THROUGH THE CONSEQUENCES FOR THE FIXED-INCOME SECTOR. STAY ON TOP WITH THE #1 INSTITUTIONAL BANK across Australia, New Zealand & Asia We believe that by working with our Customers as one, we can truly make a difference to the world we live in. Maybe that’s why we were awarded Best Sustainable Finance House 2019 in the FinanceAsia 2019 Australia and NZ Achievement Awards. 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AU23164 INSTO_KangaNews Awards Ad_Dec 2019_210x280_FA.indd 1 16/12/19 10:18 am KangaNews APR/MAY 2020 EDITION VOLUME 15 ISSUE 118 www.kanganews.com Contents Head of content and editor 18 COVID RESPONSE LAURENCE DAVISON [email protected] COVID-19 timeline Deputy editor MATT ZAUNMAYR COVID-19 and its economic and market impacts evolved [email protected] at a dizzying pace through the first quarter of 2020. Staff writer CHRIS RICH KangaNews plots the key developments with a focus on [email protected] those most relevant to Australian and New Zealand debt Head of commercial capital markets. Jeremy Masters [email protected] 30 Head of operations 4 COVID RESPONSE HELEN CRAIG COVID RESPONSE [email protected] COVID complexity: n Transaction analysis: AOFM sets the Chief executive tone with record syndication. impact on RMBS a tough SAMANTHA SWISS n Australian [email protected] Transaction analysis: call states move to bolster funding. Primary deals are possible in the n SSA issuers Design consultants Transaction analysis: Australian securitisation market, HOBRA (www.hobradesign.com) pick off Kangaroo opportunities. supported by government investment. n Transaction analysis: IFC first Photography Attention is turning to what effect DAVID SMYTH PHOTOGRAPHY, JULIAN Kangaroo mover in COVID-19 social- the pandemic might have on new and WATT PHOTOGRAPHY, BEDFORD bond market. PHOTOGRAPHY (SYDNEY), TIM existing RMBS pools. It is a formula n TURNER (MELBOURNE), THE PHOTO Transaction analysis: Canadian banks with many variables. (WELLINGTON), GALEXIA STUDIOS show Australian market is open. (MIAMI), GEORGE ARCHER (LONDON), n TIGER TIGER (AUCKLAND), IRWIN WONG Transaction analysis: AOFM presence PHOTOGRAPHY (TOKYO) supports Firstmac RMBS. n Transurban 32 Transaction analysis: COLUMN KangaNews, ISSN 1751-5548 (PRINT); reopens euro market for Australian ISSN 2207-9165 (ONLINE), IS PUBLISHED Down time SIX TIMES A YEAR BY BONDNEWS LIMITED corporates. AND DISTRIBUTED FROM SYDNEY, n Issuer insights: NZDM talks strategy There is no doubt we are in a uniquely AUSTRALIA. PRINTED IN AUSTRALIA BY stressful period, professionally and SPOTPRESS, FOR, AND PUBLISHED BY, following market return. BONDNEWS LIMITED, LYNTON HOUSE, 7-12 n Transaction analysis: LGFA personally. In a rapidly changing but TAVISTOCK SQUARE, LONDON WC1H 9LT, always frightening environment, talking UNITED KINGDOM demonstrates improving NZ demand. n Transaction analysis: Kāinga Ora’s to people in the market about the © BONDNEWS LIMITED 2020. challenges we face has been heartening. REPRODUCTION OF THE CONTENTS blockbuster return. OF THIS MAGAZINE IN ANY FORM IS PROHIBITED WITHOUT THE PRIOR CONSENT OF THE PUBLISHER. 26 34 COVID RESPONSE COVID RESPONSE Rating the banks’ Unlimited ACGB readiness purchases and direct The Australian banking system bank funding to support should be better set up to deal with RBA’s bridge CAB average net distribution the economic consequences of The RBA took unprecedented action 3,189 for six-month period ending 30 September 2019. COVID-19 than it was for the 2008-9 on 19 March to provide a “bridge” to financial crisis. But rating agency an expected economic recovery after commentary and actions underscore the COVID-19 crisis. The reserve that there is no easy way out of an all- bank expects the support package to be encompassing downturn. required for the foreseeable future. Contents 41COPUBLISHED ROUNDTABLE A BRIDGE TO WHERE? On 23 March, KangaNews hosted a live dial-in featuring some of the leading market economists 75 covering Australia. It was the same illustrious panel Q+A that was to have been a highlight of the postponed MUTUAL INTEREST KangaNews Debt Capital Markets Summit. Greg Hammond has become a key player in the mutual space, including as the author of a report into the sector that has sparked much discussion on issues including capital for mutual entities. He spoke to KangaNews shortly after the KangaNews Mutual Sector Wholesale Funding Seminar. 38 54 COVID RESPONSE SURVEY RBNZ joins Uncertainty the QE choir reigns The RBNZ added its voice to the Fitch Ratings and KangaNews have global chorus of central banks been conducting the Fixed-Income implementing unconventional Investor Survey since the first half of monetary policy measures with 2014. The 2020 iteration combines the launch of its asset-purchase a deeply negative outlook with vast programme on 23 March. It is areas of uncertainty to produce the designed to reverse tighter funding survey’s most worrying set of data conditions caused by the COVID-19 ever. crisis. 58 COPUBLISHED ROUNDTABLE 66 TWO DEGREES 50 NEWS FEATURE FEATURE Illiquidity bites New OF CONTAGION Buy side on hold Zealand credit market A panel of market participants The RBA jumped into the fog of from New Zealand, convened The New Zealand dollar corporate dislocated debt capital markets in via teleconference, agree the market appears to have battened March with an unlimited government country is in a better public- down the hatches in the face of the and semi-government asset purchase health position than almost COVID-19 storm. The specifics of programme. Local investors are anywhere but acknowledge the local demand have shielded New contemplating a cascade of market outsized influence of global Zealand from worldwide volatility on consequences. markets on the local economy. occasion but market participants say The discussion is an expanded the low-rate environment now leaves version of a panel session that it more vulnerable to global moves. would have featured at the postponed KangaNews New Zealand Capital Markets Forum. EVENT REPORT Mutual ADIs position for the future SUBSCRIBE Mutual banks’ funding evolution The second annual KangaNews Mutual Sector Wholesale Funding Seminar took place in Sydney on 25 February. Discussions covered the sector’s TODAY performance and competitive position, access to wholesale funding markets, the potential for additional-capital issuance and how mutuals can incorporate technology to add efficiency in the treasury function. KangaNews is a one-stop 68+72 information source on all issues relevant to Investa Property Group’s general Australian and New 78 manager, corporate sustainability, Zealand debt markets FEATURE Nina James, and head of corporate – including in- and planning and treasury, Lisa Story, outbound issuance. Anatomy of a taxonomy discuss the merits of a green-focused In March, Europe’s technical expert debt strategy and the company’s Each issue provides all group on sustainable finance delivered funding plans.. the information market the final report on the EU’s taxonomy participants need to for climate change mitigation and keep up to date with the adaptation. The taxonomy – and deals and trends making 86 headlines in the markets, the green bond standard that is NEWS FEATURE expected to follow it – will have global as well as in-depth issuer ramifications for sustainable finance Australian corporates and investor insights, and including for Australasian market push the boundaries deal and league tables. participants. of sustainable funding KangaNews is published An extended issuance hiatus could six times a year, with slow progress, but Australian regular reports and 83 corporate borrowers continue to yearbooks adding to Q+A show willingness to engage with the suite of printed INVESTA REAPS new sustainability-linked products. offerings. Subscribers Sydney Airport and Wesfarmers have also have access to email THE BENEFITS OF completed new sustainability-linked updates on breaking BEING A GREEN funding – the former as the first such deals and news from the FRONTRUNNER issuer in any global bond market. KangaNewsAlert service as well as full access to www.kanganews.com TO SEE ALL To subscribe or request KANGANEWS a free trial please contact COVERAGE, GO TO Jeremy Masters bit.ly/KNCOVIDhub jmasters@kanganews. (case sensitive) COVID-19 CRISIS com +61 2 8256 5577 COVID RESPONSE TRANSACTION ANALYSIS AOFM sets the tone with record syndication The Australian Office of Financial