Desjardins eyes Australian bond market for debut issuance

financialpost.com:

Desjardins Group is preparing a potential debut issuance in the Australian dollar bond market, as North America’s largest financial services co-operative seeks to diversify its funding sources to keep up with its growing lending book.

“It’s all about diversification,” Yassir Berbiche, head of treasury at Desjardins, said in an interview. Tapping the Australian market would broaden its financing sources in terms of the yield curve and the investor base, Berbiche said on the sidelines of an industry event in Portugal last week.

Desjardins has already held two investor roadshows in Australia this year and last, Berbiche said. Transactions could come in the form of repeated offerings of senior notes or covered bonds at least every 12 to 18 months. “When we open a new jurisdiction, we are committed to come back,” he said.

The Canadian lender has been expanding its lending activities in areas including corporate loans and residential mortgages at a faster pace than expected, Berbiche said. The residential mortgage sector in particular is accelerating due to falling interest rates and housing demand stemming from population growth, he said.

To fund its growth in lending, Desjardins has raised $11 billion in the bond markets so far this year, well above its initial target of $8 billion for 2024, according to Berbiche. Its most recent deal was a €500 million (US$556 million) five-year green bond, which attracted 95 investors — a record for any single debt deal from the company, Berbiche said.

The Bank of Canada has cut interest rates three times since June to bring the benchmark overnight rate to 4.25 per cent, while cooling inflation paves the way for even larger cuts ahead. The rate cuts were in part aimed at reviving the