Australian House of the Year: ANZ

For ANZ, the last 12 months can be divided into two parts. The second half of 2021 was marked by high volumes, strong growth and aggressive customer behavior. At the start of the year, risk aversion sentiment increased as inflationary pressures intensified and the likelihood of interest rate hikes increased.

“It really played into the strengths of our franchise and the holistic way we see the market,” says Jimmy Choi, global head of capital markets at ANZ. “If you look at all the industries we’re in, we’re leading in terms of market share and in terms of execution. This has been important in order to be able to offer our customers the type of products and solutions that best serve them, based on changing market conditions. »

Strong structuring capabilities and efficient deal execution helped ANZ landed significant deals this year – and also contributed to the innovative solutions the bank was able to craft.

It’s not just about the internal expertise that the bank has. It is also thanks to the sophisticated platform for structuring multi-asset derivatives, SKYthis ANZ launched in 2014 and continues to develop.

Ongoing system changes include the integration of SKY in ANZso that pricing is consistent for all customers across all sites, and the transition from an on-premises grid computing infrastructure to a hybrid cloud model may occur, which will enable greater scale and greater high capacity in times of market stress.

An agreement that shows the strength of ANZThe global structuring solution is a complete financing and risk management solution offered to an offshore asset manager.

This asset manager had just obtained a WE$3.5 billion senior secured facility to support their acquisition of part of an infrastructure asset in Australia.

This agreement was particularly well received by ANZthe structuring team, as it ticked a number of green boxes for the bank; the objective of the infrastructure project was to develop one of the country’s low-carbon gas sources.

ANZ played several roles in this transaction, including as lead arranger, pre-financial closing Effects hedging bank and provider of interest rate hedging.

ANZ was one of the six banks chosen to execute the Effects hedging and won a higher pro rata share of 25% of the total exposure. The bank’s pre-financial closing hedge was subject to compliance with a number of conditions and backed by a letter of credit issued by a counterparty rated at least AA-. A particularly unusual aspect of this transaction was that it had been completed before the financial close, so there was no guarantee that the transaction would continue when it was executed.

ANZ executed a total of 400 million Australian dollars (WE$269 million), with deals lasting five years. In recognition of the value that ANZ contributed to the operation, the bank also obtained WE$225 million of long-term interest rate swaps to support the transaction.

Green certificates

Like the agreement highlighted above, many of the historic transactions that ANZ has closed over the past year is part of the green agenda that the bank is trying to promote.

“This commitment to sustainability is essential to our strategy, and we have been very candid in expressing our views where the agreements do not meet our long-term goals or those of the country. We strayed from agreements where we had to,” says Matthew Morris, head of franchise markets in Australia at ANZ.

In June of last year, ANZ was co-lead manager of the first sustainability bond (SLB) in the Australian dollar-denominated medium-term note market.

The transaction was completed for Wesfarmers, a diversified conglomerate headquartered in Perth, operating primarily in retail, chemicals, fertilisers, industrial and safety products.

The SLB included coupon increases based on sustainability goals achieved, as well as a bounty payment mechanism in case they are not met.

Wesfarmers sought to raise A$1 billion in this way. There were two tranches of issuance: seven-year unsecured and 10-year unsecured.

There was a very strong demand for this product, which peaked at over 2.65 billion Australian dollars. This enabled Wesfarmers to raise A$650 million on the seven-year tranche, with an interest rate of 1.94%, and A$350 million on the 10-year tranche, with an interest rate 2.55%.

This represents the lowest coupon of each maturity this year by a corporate issuer. The final allocation was distributed to over 80 accounts, driven by nearly equal demand from domestic and foreign investors. Settlement of the transaction is expected to occur on June 23, 2023.

“Being first to market meant a lot of work: setting up a governance framework, explaining the importance of the issue to investors, explaining to local investors how a SLB works and what KPIss are. It all took time,” says Morris. “It’s a big deal that puts a marker in the sand for future transactions.”

Other green transactions that ANZ helped organize this year includes a New Zealand$200 million (WE$119.8 million) sustainability loan for Auckland Council in New Zealand; a New Zealand$100 million over 6.5 years SLB for Spark Finance in New Zealand; a 115 million Singapore dollars (WE$81.8 million) sustainability-linked loan for Hyundai Group and Hong Kong’s largest USD value of green bonds WE$4 billion, issued by Airport Authority Hong Kong.

“Everyone is showing off their green credentials, but we have a really big ESG team here and, more importantly, we do a lot of groundbreaking work, whether it’s helping to set up new government frameworks or bringing new, never-before-seen structures to market,” says Choi.

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