Australia\u2019s bond market is on a tear, with new issuance reaching a year-to-date record of A$275 billion and CBA economists predicting the market will exceed the A$322 billion all-time peak by year end. Kangaroo bonds \u2013 debt denominated in Australian dollars but issued by foreign entities \u2013 are supercharging this trend, contributing A$62.4 billion or 27% of this year\u2019s new issuance.<\/p>\n
“In many of our recent client meetings with international issuers, we\u2019re now hearing them say that when it comes to markets they plan on tapping frequently, Australia ranks as No.3 behind the US and Europe,\u201d said Chris McLachlan, Executive General Manager Global Markets at Commonwealth Bank. \u201cThat sentiment speaks to the growing appeal of Australia as an increasingly liquid market, that\u2019s well understood by issuers, and offers something of a safe harbour from the complexities of the external geo-macro environment.\u201d<\/p>\n
Historically, Australia has always held appeal for foreign borrowers, thanks to its stable government, transparent regulatory framework, and the Australian dollar\u2019s status as a global reserve currency.<\/p>\n
But the nature of offshore issuer participation has evolved dramatically in recent years. A decade ago, Kangaroo bonds were typically small, illiquid deals which were quickly swapped into other currencies. Since 2022, however, offshore issuers \u2013 especially Canadian institutions \u2013 have embraced the market with larger, more liquid transactions, helping fuel a 47% expansion and adding nearly $1 trillion in value over the past 5 years.<\/p>\n
Canadian investors leading the way<\/p>\n
Helping to lead this transformation is CPP Investments, which issued its first billion-dollar Kangaroo bond in 2022, a year after it tested the market with a few smaller transactions.<\/p>\n
\u201cThe Aussie market has always been a good bond market. Now we\u2019re hitting additional maturity milestones\u2014volume, depth, liquidity, and increased investor diversity. ”<\/p>\n
\u201cWe made a commitment to size in 2022, we were the first to do it, and that commitment is to issue two A$1 billion-minimum transaction per year,\u201d said Sam Dorri, Managing Director, Balance Sheet Optimization & Financing at CPP Investments, which invests funds on behalf of the Canada Pension Plan. \u201cSince we\u2019ve made that commitment, we\u2019ve exceeded that number considerably. A$2.5 billion is the biggest transaction we\u2019ve issued, but they\u2019ve all been over a billion and that\u2019s a very big differentiating point for us,\u201d he said<\/p>\n
Canadian issuers have consistently led the charge. While deal sizes have been growing across the board, Canadians stand out as their average deal size is nearly double that of the average Kangaroo. CBA data show that the average Kangaroo deal size in 2025 is A$474 million in 2025, up from A$350 million a year earlier, Canadian Kangaroo deals average A$799 million, up from A$700 million in 2024.<\/p>\n
More billion-dollar deals<\/p>\n
Size matters in bond markets. \u201cA$1 billion-plus deals get noticed by large investors, and we\u2019re seeing them much more frequently among Kangaroos,\u201d said CBA\u2019s McLachlan. \u201cThey signal liquidity, which is crucial for asset managers who need to trade in and out of positions. When you see a billion dollar deal, there\u2019s an expectation that you will be able to get in and out of it in the secondary market, and that\u2019s appealing to global asset managers.\u201d<\/p>\n
That liquidity is increasingly evident in Australia\u2019s debt market. Turnover in high-grade bonds exceeded A$2.5 trillion in FY25, with CBA-executed volume doubling compared to FY23.<\/p>\n
CPP Investments actively supports this secondary market. \u201cWe commit to buying and selling our own paper at mid-market,\u201d Dorri said. \u201cIt gives dealers confidence they can on-sell that paper to us if needed, which provides a lot of comfort to the investor base.\u201d<\/p>\n
This liquidity commitment spans CPP Investments five currency markets \u2013 USD, EUR, GBP, CAD, and AUD, reinforcing its reputation as a reliable issuer.<\/p>\n
Demand for longer-dated debt<\/p>\n
Australia\u2019s debt market is also maturing in tenor. While the majority of Australian bonds carry 3\u20135 year maturities, there has been a steady stream of successful 10-year tranches and local pricing and liquidity are now competitive out to 30\u2011plus years, signalling growing investor appetite for longer-dated debt.<\/p>\n
This latest development, in combination with its growth momentum and increased global investor participation, indicates a bright future for Australia\u2019s debt market, Dorri said.<\/p>\n
\u201cThe Aussie market has always been a good bond market,\u201d Dorri added. \u201cAnd now we\u2019re hitting additional maturity milestones\u2014volume, depth, liquidity, and increased investor diversity. As an issuer, these factors validate our decision to be programmatic and consistent in this market.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Australia\u2019s bond market is on a tear, with new issuance reaching a year-to-date record of A$275 billion and…\n","protected":false},"author":2,"featured_media":245601,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[64,63,99,139524,44],"class_list":["post-245600","post","type-post","status-publish","format-standard","has-post-thumbnail","category-australia","tag-au","tag-australia","tag-business","tag-cba-story","tag-news"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/245600","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=245600"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/245600\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/245601"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=245600"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=245600"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=245600"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}