A record six asset backed security (ABS) transactions raised close to $10 billion dollars this week. According to KangaNews, issuance volume for the month should reach at least $16.7 billion by 25 September, making it the largest month in Australian dollar securitisation ever.
The largest transaction was also a record. ColCap, previously Columbia Capital, a 20-year veteran non bank lender raised a whopping $3 billion in a prime residential mortgage backed securities (RMBS). Strong demand led to the original $1 billion target being upsized.
ANZ raised $2.5 billion. Other issuers included Bendigo and Adelaide Bank, Australian Finance Group, Angle Auto Finance and Hummgroup’s Flexicommercial.
Investors in the new issuance were a mix of local and international.
Talking about new issuance, there were also two new products. Macquarie Bank launched a new ETF, the Core Australian Bond Active ETF (ASX: MQFI), while iPartners launched its Property Investment Notes (PINotes).
The Bathla administration will take years to unravel and has caused some nervousness in the market. So, I was excited to read La Trobe Financials’ Chris Andrews’ paper about private credit cycles and questions investors need to ask. The paper was thorough and compelling, so rather than print it all together, I’ve split it into two. Part 1 puts the asset class into perspective, covering past credit events and common failings. Part 2 lists six questions investors need to ask, as well as how to think about the market. Andrews includes a long list of footnotes and sources.
Queensland’s Brisbane Lions are in the AFL grand final this weekend, but the State’s credit rating was downgraded by S&P Global from AA+ to AA. Challenger has written an excellent analysis, comparing all states’ credit ratings.
Thomas Poullaouec from T. Rowe Price is back with his popular, monthly asset allocation view from Australia.
Emerging markets are an interesting and diverse group of countries. Ninety One has published a new paper highlighting five structural shifts in EM private credit.
Finally, the ASX has launched a new secured overnight benchmark, SOFIA.
In Australian corporate bond market news:
- Infratil is sounding out investors for a seven-year senior unsecured deal
- Transgrid has launched a senior and subordinated deal:
- A fixed-rate 10-year senior secured deal with price guidance of 165 basis points over semi-quarterly swap
- A floating-rate subordinated 30NC10 with price guidance of 195 basis points over 3-month BBSW
- Macquarie Bank has raised $1.4 billion in a multi-tranche subordinated Tier 2 deal:
- $700m in a 10.5NC5.5 floating rate priced at 152 basis points over 3-month BBSW
- $200m in a 10.5NC5.5 fixed-to-floating deal priced at 152 basis points over 3-month BBSW with an issue yield of 6.5784%
- $500m in a 15NC10 floating deal priced at 177 basis points over 3-month BBSW
- Port of Brisbane has chosen banks for a 7.25-year fixed-rate deal.
Hope you’re having a great week!
