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Debt Market Update Q3 2019

Debt Market Update Q3 2019

The third quarter of 2019 displayed a continued trend of market volatility. Around the world, central banks have responded to economic conditions and persistently low inflation through further monetary stimulus and quantitative easing. The RBA, US Federal Reserve and European Central Bank have all cut rates in an effort to further stimulate economic and employment growth.

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The Australian economy has shown continued resilience through population growth, public infrastructure spending and strong export commodity prices. However, areas of weakness include consumer spending, low inflation levels and an increase to the unemployment rate.

The outlook globally remains uncertain, with the ongoing US-China trade war and concerns over Brexit continuing to weigh on market sentiment and international trade.

Key themes

Market conditions – the RBA cuts the official cash rate to a record low of 75 basis points in response to a higher unemployment rate and concerns over the global growth outlook.

Australian bank debt market – decreased loan volumes with refinances comprising the majority of transactions in the period.

Offshore bank debt funding – continued appetite for Australian corporate debt from offshore banks, in particular Asian-based banks.

Australian domestic bond market – modest increase in domestic bond issuance volume for Q3 2019.

USPP – noticeable decrease in volumes from Australia and NZ issuances during the quarter, however rolling 12 month volume remains positive.

Notable transactions

Notable syndicated transactions for the quarter included:

  • CIMIC Group Ltd (CIMIC) concluded a $1.9 billion dual-tranche revolving credit facility in September. The loan is structured into two equal volume facilities of four and five-year tenors.
  • Woolworths Ltd (Woolworths) completed a $2 billion multi-tranche loan facility in September which was used to refinance two existing facilities. The facility was split into tranches of four, five and seven-year tenors.
  • Vodafone Hutchison Australia closed a 5-year $1.7 billion dual-tranche bullet term loan in September. The deal attracted a total of 22 banks within the syndication.
  • QIC Finance (Property Fund) Pty Ltd (QIC Finance) closed a $400 million dual-tranche loan across a syndicate of 14 lenders in June.
  • China National Offshore Oil Corp (CNOOC) has sought proposals from financiers to complete a US$950 million five-year term for the refinance of funding for an Australian LNG project.

Debt Market Quarterly Update

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