Australian dollar-denominated bonds from international issuers, or so-called kangaroo bonds, are seeing strong traction lately, with our DCM and A$ syndicate teams having an active year advising notable issuances from across Canada, Europe, the Middle East and Korea, with many of these transactions netting record order books.
While demand for kangaroo bonds traditionally came from investors in Australia and Asia Pacific, the market is increasingly attracting global attention as the world looks for US dollar diversification. While we believe full-fledged de-dollarization is unlikely, the US dollar will likely be weaker and more volatile. As a result, investors who work in treasuries or asset liability management roles are looking to manage risk by diversifying their investments beyond US dollar assets.
While this has led to increased interest in alternate currencies such as the euro and Japanese yen too, the Australian dollar…
