Fixed Income New Issues- Opportunities aplenty

There has been an enormous flurry on new corporate and structured debt capital transactions of all types since the start of March. Notably:

• Structured transactions for non-bank lenders have funded assets across different types: BNPL, prime and non-conforming mortgages, auto loans,?small ticket commercial. The Australian structured capital market has really, really come of age. Further, the diversity of structured transactions corroborates the trend of non-bank lenders flourishing. That trend will continue
• Warehouse mezzanine tranches are an integral part of non-bank lenders’ funding structures. During 2020, the Australian Office of Financial Management (AOFM) stepped into the Warehouse mezzanine market to support non-bank lenders. Now that that market has stabilised, there is a plethora of non-banks seeking financing away from the AOFM. There is much investor demand as these mezzanine tranches still offer meaningful income opportunities as investors clamber for yield
• FIIG is in the fray: in April, FIIG completed a refinancing of Zip Co. Limited’s Warehouse mezzanine tranche which was strongly received by investors
• Further, term structured deals, particularly lower rated, higher yielding tranches, have been many times oversubscribed as investors clamber for yield. That yield is afforded by credit margins which ranged from 300bps to 600bps
• Long dated, well rated fixed rate corporate issues have also been common

Whilst investors clamber for yield, issuers are taking advantage of historically low base interest rates and low credit spreads.

FIIG has been very active is sourcing allocations of the new issues to ensure clients can participate. Since March alone, FIIG has bid $160 million, winning $72 million for FIIG clients. Most success has come with WestConnex’s (Baa2) and Lend Lease’s?(BBB+) 10 year fixed rate issues.

Also in April, FIIG launched a sole lead arranged a $30 million third transaction for WAS Stockwell, a property developer and funds manager. The five year fixed rate deal paid 7.25% pa. The transaction was eagerly sought by FIIG investors with a total of 544 bids.

Quite simply, it is a great time for non-bank lenders and corporates to borrow. FIIG has a very strong Debt Capital Markets team with strong credit analysis capability. When linked to FIIG’s powerful distribution engine into Private Clients, High and Ultra High New Worth clients as well as major Institutions, FIIG represents a powerful fund raising partner for companies and structured debt originators of all types. If you are a corporate and looking for between $10 million in $100 million in debt funding, please check out FIIG. www.fiig.com.au?

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