• Service: Advisory, Deal Advisory, Corporate Finance, Topics, Capital Management
  • Industry: Financial Services
  • Type: Business and industry issue
  • Date: 28/02/2013

Debt Market Quarterly Update

KPMG's Debt Market Update reviews debt market activity and provides insights into the latest trends and the implications for Australian companies.

David Heathcote

David Heathcote
Partner in Charge, Debt Advisory Services

+61 2 9335 7193

Debt Market Quarterly Update: Q4 2012 

Renewed optimism was evidenced in the final quarter of 2012, as volume of debt issuance in the Australian syndicated loan market rebounded strongly on the back of some large scale debt issuance in the energy sector. For the full 2012 calendar year, positive momentum was evidenced in corporate bond issuance with 2011 volume being surpassed by US$8 billion.
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Further, the percentage of corporate bonds issued relative to syndicated loans increased to 39 percent in 2012, up from 29 percent in 2011.

Also, whilst the banks are continuing to compete strongly for customer deposits, we are now seeing far more favourable conditions for banks accessing wholesale funding which could translate into further tightening of investment grade corporate margins for the remainder of 2013.

Key themes

  • Australian loan market volume picks up in Q4 2012, however activity and transaction volumes are still lower relative to the refinancing peaks of 2011.
  • Banks' cost of funding comes under the spotlight.
  • Australian corporates tapping the US Term Loan B Market.
  • S&P changes its rules on the 'equity credit' afforded to hybrid issuances.
  • Basel III delayed and relaxes liquidity ratio rules.

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