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Macquarie Joins Australia’s Bond Refinancing Rush, With More to Come

Adam Haigh

(Bloomberg) -- Australia’s financial firms kicked off what’s expected to be a bumper 2020 for refinancing corporate bonds, with National Australia Bank Ltd., Macquarie Group and Westpac Banking Corp. raising funds within the first two weeks of the new year.

The value of issuance by local companies in currencies other than the Australian dollar may climb to about $85 billion after two sluggish years, thanks to investor demand for yield and the need for banks to bolster capital buffers, according to Australia & New Zealand Banking Group Ltd.

“Australian issuance is like a drop in the ocean compared to demand,” Owen Gallimore, head of credit strategy at ANZ, said by phone from Singapore. Investors “are lapping it up,” he said.

Companies around the world are rushing to borrow cheaply while they can, with the U.S., Europe and the Asia Pacific all seeing strong starts to 2020. In Australia, that appetite has been visible in a number of deals this month as companies take advantage of funding costs that sit near all-time lows.

The desire isn’t restricted to corporate bonds -- demand for sovereign debt has also been strong, with an auction Wednesday seeing bids surge to an 18-month high amid expectations for lower Australian rates and a recent tick up in yields.

About $50 billion of the forecast issuance will come from Australia’s four largest banks, according to ANZ’s Gallimore, with the regulator expecting the bulk of additional requirements to come in so-called Tier 2 notes, a form of subordinated debt.

--With assistance from Finbarr Flynn.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Ravil Shirodkar

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