First Australian Dollar Bond From Asian Issuer in 2020 Sees Strong Demand

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(Bloomberg) --

A sale of Australian dollar notes by Export-Import Bank of Korea met strong investor demand, in another sign that activity is reviving in the Kangaroo debt market after the coronavirus pandemic caused deal volumes to plunge.

Kexim received more than A$1.7 billion ($1.1 billion) of orders when it priced A$700 million of bonds in a two-part deal Wednesday. The South Korean state-run lender was the first Asian borrower to offer new Kangaroo notes this year, Bloomberg-compiled data show.

The Korean bank is one of several foreign issuers that have tapped the Aussie bond market recently, encouraged by its relative calm and cost-effective funding due to attractive cross-currency basis swap levels. Investor appetite for Kangaroo bonds has increased because of the recent lack of supply and a more positive market tone as more countries plan to ease virus-related restrictions, according to Lorna Greene at National Australia Bank, one of the managers of the Kexim deal.

Read more: Foreign Issuers Line Up Aussie Bond Sales Where Basis Looks Best

Kexim’s bond sale will “pique the interest of other international borrowers and has opened the Aussie bond market for other Korean issuers,” said Greene, a Hong Kong-based director of debt syndicate and origination for Asia at NAB.

The latest Aussie bonds from Kexim priced at least 10 basis points less than its similar U.S. dollar notes, the lender said in a statement Thursday. The bank will actively take advantage of opportunities in niche markets to diversify its funding sources, it said.

©2020 Bloomberg L.P.

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