Local bond issuers turn to US private placements
Early 2023 was a relatively unstable period for debt markets fuelled by increasing interest rates, regional US bank failures and rising inflation. As a result, a number of local issuers turned to the US private placement (USPP) market in larger numbers than previous years.
The Australasian USPP volumes for tenors eight years and longer stands at roughly $4.86 billion (equiv. using YTD average exchange rate) in the calendar year to September 12th. This is more than 5.6 times the issuance in the Australian domestic market, which stands at roughly $0.87 billion[1] for the same period and tenor.
The rebound in the USPP market was driven by the same reasons that have set it apart for more than three decades — long-term funding commitments, stability of pricing and a reliable pool of liquidity. These characteristics have remained consistent through times of market dislocation.
Rosalie Valladares, executive director and head of debt private placements at CBA.
“Part of the attraction is the resilience of the market and that it has remained supportive of issuance in a broad range of credit environments,” says CBA’s executive director and head of debt private placements, Rosalie Valladares. Importantly, it also “provides flexibility across tenors and tranche sizes” which is highly attractive for local corporates looking to diversify their debt funding, she says.
Moreover, there’s no minimum tranche size. “It’s a market that has proven to be a vital avenue for those local corporates seeking to broaden their funding sources and target a specific duration outcome,” Valladares says.
According to Valladares, Australian issuers with long-term assets are a great match for the US investor base. Given US private placement investors are
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