Investor demand was dominated by investors from Australian and New Zealand, which accounted on average for 78 per cent of the corporate orderbooks, up from 70 per cent in 2019.
Furthermore, the composition and quality of the order books increased, approximately 83 per cent of corporate orderbooks comprised of real money accounts, up from 77 per cent in 2019, which was expected given the demand driven from Australia and New Zealand.
Australian issuers also had success in the $US 144A/ Reg S markets due to historical low benchmark yields, compressed credit spreads and a favourable basis swap rate that made the $US public market more appealing.
However, issuance was dominated by one company – shopping centre owner and operator Scentre Group – which accounted for about 68 per cent of total Australian corporate $US issuance. In contrast, issuance by Australian corporates in the US Private Placement market plunged about 50 per cent compared to 2019 as central bank liquidity supported public markets.
Issuance in the Euro bond market reached $A7.1 billion equivalent, largely in line with volumes in 2019. Issuance was primarily focussed in the first half of 2020 when volumes and pricing were more favourable at the time.
Utilities and infrastructure sector leads
The utilities and infrastructure sector led $A issuance, accounting for 49 per cent of supply in 2020 compared to 27 per cent in 2019. Some 15 transactions priced for an average deal size of $A478 million, a meaningful increase from 2019’s average of $A372 million.
The property sector continued to find favour with investors, making up 20 per cent of total issuance. Favourable market conditions especially for defensive industrial REITS resulted in a number of first time issuers tapping the market such as Charter Hall and Goodman Australia.