Debt listings, Australian bank share sales eclipsed IPOs on NZX in 2015

Friday 8th January 2016

The listing of local government bonds and share sales by Australian banks to bolster their balance sheets eclipsed capital raised from initial public offerings in 2015, NZX data shows.

A total of $1.7 billion of new capital was raised from IPOs and compliance listings last year, down from $4.7 billion in 2014, while $8.1 billion of new debt was listed, up from $1.7 billion, according to NZX's shareholder metrics. Secondary listings soared to $12.9 billion from $2.4 billion a year earlier, as dual and secondary issuer equity raised jumped to $11.1 billion from $1.2 billion a year earlier.

Australian dual-listed banks raised capital this year to bolster their equity buffers and comply with new Australian Prudential Regulation Authority requirements that lenders hold more capital on their books to mitigate the risk of losses on home loans. Australia & New Zealand Banking Group raised A$3 billion, largely in a placement to institutional investors, Westpac Banking Corp raised A$2 billion through a dividend reinvestment plan, while National Australia Bank sold A$5.5 billion of stock in a rights issue.

The NZX debt market expanded in November after the New Zealand Local Government Funding Agency listed all six existing series of its bonds, representing a total $5.56 billion.

The listing of the bonds, which range in maturity from 2017 to 2027, increased the market capitalisation of the NZDX market by 50 percent to $19.8 billion last year, compared with the year earlier.

Initial public offerings dried up, with just four in 2015, compared to the 12 main board IPOs in 2014. The 2014 IPOs have not performed well, with the value of shares in Orion Health Group dropping 46 percent to make it the worst performer across the NZX 50 Index in 2015, Intueri Education Group shedding 76 percent of its value in the past year and ERoad dropping 41 percent.

In December, the Reserve Bank cut the official cash rate to a record-low 2.5 percent, making stock returns more attractive as interest rates on term deposits stayed low.

Debt transactions rose 27 percent to 2,888 in December from the same month of 2014 as the value soared 93 percent to $131 million.

Equity trades increased 27 percent to 125,032 last month from December 2014 and the value rose 18 percent to $3.2 billion.

Total trades of debt and equity advanced 27 percent to 127,920 in December while the daily average traded gained 19 percent to a total $159 million.

In the year, total trades rose 12 percent to 1.46 million and the value of trading increased 19 percent to $41.7 billion.

The stock market had $110.2 billion of equity securities at the end of December, up 14 percent from the year earlier, amounting to 45 percent of gross domestic product. It had $19.8 billion of debt securities, up 50 percent from the year earlier, equal to 8.1 percent of GDP.

The benchmark NZX 50 Index advanced 13.6 percent in December from the year earlier to close at a record 6,324.

Shares in NZX last traded at $1.05 and have declined 9.5 percent over the past year.

BusinessDesk.co.nz

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