NAB’s Chief Economist, Alan Oster provides his thoughts on the Australian and Global economy.
As Steve Lambert, EGM Capital Financing, explains, 2014 was the year that opened up new opportunities for customers - from the new funding model for local government to the higher education sector emerging as a new borrower in the market. We review the year in our magazine.
Every year it surprises me how quickly we come to the end and how much we are able to deliver for our customers. This year is no different.
We’ve been doing this magazine for three years now, and every year it seems to cover just that much more in terms of markets and capabilities. This is a great reflection of our ability to meet the needs of our customers while navigating changing market conditions.
2014 was a story of opposites. When one market was open, or one sector issuing, another one closed. Overall, deal volume was on par in most markets and there were more deals on the go, reflecting customers’ changing demands. Frequent Issuers dominated the bond market, with only a few corporates issuing late in the year.
Interesting to note was the high level of university funding in the A$ market, positioning the domestic market as a viable funding option for the sector. In addition to universities, the A$ market saw the entrance of multiple BBB issuers and was quite receptive to these deals.
This year told a good story on cementing our offshore capabilities. Australia is still our dominant market – supporting our Australia and New Zealand client is at the core of NAB’s strategy. However, in the US we saw renewed activity in 144a, RMBS placement, and new activity in hybrid capital. The UK also saw strong growth in Euro and Sterling denominated bonds, increasing awareness in our issuer client base. In Asia our bond issuance has increased year on year. A lot of that is thanks to our work on the team, bringing in new capabilities and products. Zero coupon callable and CNH deals were significant additions to our activity in Asia.
We continue to play a leading role in deepening the Australian Corporate Bond Market as a key pillar of funding Australia’s future. This year we launched our Debt Securities Handbook – a key educational piece to help investors understand fixed interest as an asset class. We continue to drive both supply and demand sides of the bond market and education remains the key – hence pulling together this magazine each year. We also now have a solid media profile on Sky Business with Mark Todd from Your Money, Your Call joining the team in 2014. He hosts many guest speakers from NAB and the industry and presents an insightful show for viewers.
NAB is playing a key role in the infrastructure space and this market is becoming more important every year. We hold a solid position in Australia in the project space having been on six of the last seven PPPs in 2014. The global renewables market is also gaining strength and there’s quite a bit of interesting work happening where we can play a leading role supporting our customers.
We’ve also been on the forefront of the Social Impact investment market in Australia. We’ve been busy developing new products that we hope will come to market in early FY15. We’ve been working with governments and private sector organisations to fund social services. There’s a growing gap in funding and NAB can play a pivotal role in identifying new models that are sustainable and tailored to these customers. In order to promote our credentials and the importance of building this market, we held a roundtable in September with some key industry leaders. I can’t wait to see us make further progress next year, and hope to see NAB leading the development of this in Australia.
All these topics and more have been touched on in this magazine and I hope you enjoy reading it. As we enter 2015 we see continued volatility and uncertainty with geopolitical risks and slowing growth presenting challenges for our customers. We will continue to listen to your needs and tailor our solutions in order to provide the best outcome for our customers.
NAB thrives in finding new opportunities for customers where others tend to see barriers, and I look forward to seeing where this next year takes us.
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