Australia In The Capital Markets

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  • Tough APRA sticks to its guns despite calls to soften stance

    Caution is more deeply engrained on the psyche of Australia’s financial services regulator than in almost every other developed economy. But calls are growing louder for APRA to loosen its grip, especially over the implementation of the Basel III capital requirements and its attitude towards Australian banks expanding overseas.

  • The world’s favourite public sector borrowers

    Australian public sector issuers, including the government, are in the fortunate position of being in demand — both at home and overseas — thanks to that rare combination of solid fundamentals and attractive yields.

  • Supers scramble to fill infrastructure financing gap

    The needs are vast; the financing perilous. For Australia to keep on top of its infrastructure, new sources of liquidity must be unearthed and nurtured quickly. One answer might be the suprannuation funds that are slowly beginning to develop a taste for the asset class.

  • Levelling out: Kangaroos find new balance

    The euro crisis, the Australian regulator’s tough stance on what do and do not qualify as level two assets and the rising cost of the cross-currency swap have combined to make the Kangaroo market a difficult place to do business. But volumes are picking up again, with Asian banks and non-euro SSAs leading the charge.

  • Kanga buyers seek long term commitment

    The Kangaroo bond market has slowly picked up in 2012, after six months of enforced hibernation while it sheltered from the Eurozone debt storm. But it is Asian funds driving the renewed activity, as Australian investors continue to hold back. Tessa Wilkie reports on what the tainted Europeans need to do to win them over again.

  • International reality finally hits booming loan market

    Australia’s syndicated loan market, up until the end of last year, had bucked the international trend of falling volumes and higher pricing, with 2011’s numbers an impressive 68% ahead of the year before. But with lower credit growth, substantial refinancings undertaken in 2011 and borrowers diversifying into the capital markets, 2012 has been much tougher.

  • Europe’s SSAs still struggling to crack open Kangaroo cash till

    The eurozone sovereign debt crisis has shaken up the Kangaroo market for supranational and agency borrowers. With Australian dollar investors still wary of European risk, Stefania Palma finds out which borrowers are calling the shots.

  • Envy of the Western world: Australian government debt

    Australian bankers and investors continue to use an expression to describe the local government bond market which has become unfashionable in Europe. Unlike sovereign bonds in a growing number of developed economies, Australian Commonwealth Government Securities (ACGS) continue to be seen as "risk-free", and will remain so for the foreseeable future.

  • Covered bonds prove their worth despite unsteady start

    Covered bonds have quickly positioned themselves as a key funding tool for Australian banks across an impressive number of currencies. But with total issuance capped at a conservative 8% of total assets, the banks will need to manage their capacity carefully.

  • Cost-conscious semi states look to maintain funding advantage

    The credit quality of many Australian states is clearly under pressure, with GST revenue declining and expenditure rising. As far as the states’ funding programmes are concerned, this may not matter. They enjoy strong support from the Commonwealth. They command lower borrowing costs than most SSA borrowers. And their level one status for LCR purposes means they can depend on continued demand from domestic banks. To discuss their future funding requirements and strategies, a number of the Australian states gathered at the EuroWeek semi-government borrowers roundtable in Sydney in July.

  • Companies shift focus to bond markets

    Australian firms looking for funding used to rely on local loans and overseas alternatives such as US private placements. But with Basel III threatening loans, international bond markets under sustained threat from volatility and superannuation funds raising fixed income weightings, there is a pressing need for a deep and liquid domestic corporate bond market.

  • Building a fixed income culture

    The under-development of Australia’s corporate bond market has been identified by local regulators and investment bankers as a potential Achilles Heel in an otherwise very robust financial system. Historically, this has not much mattered to the larger Australian corporates, which have always been given a warm welcome in the public and private US dollar markets. Nor has it mattered much to domestic investors, who have been comfortable with the risk-reward dynamics of the equity market. It may matter considerably more if the US dollar market becomes less accommodating towards Australian borrowers, or if the economics of offshore issuance become less favourable for borrowers without a US dollar requirement. It may also matter much more if Basel III capital charges or other external influences make bank debt scarcer or more expensive. And it will also matter when urgently needed infrastructure projects struggle to access longer-dated funding in the domestic market. The EuroWeek corporate roundtable invited issuers, intermediaries and investors to exchange views on the prospects for a deeper and more liquid range of funding options for Australian corporate borrowers.

  • Australia’s luck set to run and run

    Politicians often make outlandishly patriotic statements about their country — even when they may have little cause to do so. But when Australia’s Treasurer Wayne Swan recently declared it to be the “best” advanced economy in the world, his claim was more than justified. Australia has, of course, many areas for concern, including a dangerous reliance on Chinese imports, an overheating housing market and fears of uneven growth across the country. But with its natural resources sector booming, a strong banking system and healthy public finances, while much of the rest of world languishes in economic turmoil, Australia looks set to remain the investment destination of choice.

  • Australia’s banks enjoy most-favoured status

    Australia’s leading banks are widely recognised as being among the world’s strongest. Their robust capital levels, solid profitability and domestic orientation are reflected in their ratings: of the 16 banks in the world that are still rated double-A or higher by Moody’s, a quarter are Australian. Nevertheless, vulnerabilities remain, with some analysts still expressing concern about the dependence of the big four Australian banks on international wholesale and short term funding. That reliance has been reduced significantly since the global financial crisis, with deposits having risen sharply, and loan to deposit ratios falling to much more manageable levels over the last three years. This, twinned with declining borrowing requirements and access to an expanded range of funding sources, continues to make Australian banks popular with domestic and international fixed income investors. To discuss the challenges and opportunities that lie ahead for Australian banks, leading issuers, intermediaries and investors gathered at the EuroWeek financial institutions roundtable in Sydney in July.

  • Australia’s banks emerge from crisis in credit

    Australia’s banks are the envy of the world, at least from a funding perspective. They have weathered the financial crisis better than most, emerging stronger than before on a relative basis. But their funding models are being scrutinised, with their dependence on wholesale markets a concern, while observers warn of the dangers of the battle for deposits among Australia’s banks escalating into a war that would push their aggregate cost of funds even higher they are today.

  • Australia in the Capital Markets 2012 Full PDF download

  • Australia in the Capital Markets 2012 Data Section

  • Australia holds its breath as China outlook clouds over

    China swallows A$73bn of Australia’s exports — 27% — of which $50bn is mineral resources. No wonder every Australian is praying for China to avoid a hard landing.

Publisher: Oliver Hawkins

Telephone: +44(0)20 7779 7304

Commercial director of events: Daniel Elton

Telephone: +44 (0)20 7779 7305

 

Publisher, special projects: Ashley Hofmann

Telephone: +44 (0)20 7779 8740