Asia turns to Aus debt

Australia’s capital markets have continued to assert itself in the Asia-Pacific region, with 2025 shaping up to be another landmark year for issuance and investor engagement.

Records are tumbling, driven by structural shifts in investor behaviour and growing interest from regional issuers.

Aussie market rises amid de-dollarisation

Jimmy Choi, Head of Capital Markets at ANZ, points to structural shifts, specifically de-dollarisation.

“De-dollarisation has been a central theme in investor conversations we’ve had this year,” Choi says.

De-dollarisation refers to the phenomenon of economies weaning themselves off the greenback as the global reserve currency.

“As institutions look to reduce exposure to US dollar-denominated assets, liquidity in alternative markets like the Aussie dollar medium term note (A$MTN) has improved, creating a strong technical demand backdrop,” he says.

This shift has translated into robust issuance figures. By the end of Q3, A$MTN issuance (excluding private placements) reached A$215 billion, already tracking ahead of 2024’s record-breaking pace. “2025 marks the third-largest A$MTN volume year on record—with one quarter still to go,” Choi notes.

All sectors have been performing strongly, with financial institutions accounting for 39 per cent of volume year-to-date, followed by government and semi-government issuers (34 per cent), supranationals (17 per cent), and corporates (10 per cent). Kangaroo bonds—foreign issuers tapping the Australian market—have also surged, representing 27 per cent of total volume, one of the strongest showings in five years.

“The Australian market is now viewed as a solid alternative outside the traditional US dollar and Euro markets,” Choi added.

Yield and duration drive investor appetite

The Reserve Bank of Australia has held rates steady this month amid expectations that stubborn inflation will shorten this cycle of cuts. Choi believes this is supporting continued demand.

Investor focus on yield and duration has revived interest in subordinated and longer dated instruments. “Higher rates should support this demand dynamic and help keep spreads compressed, barring any major market-moving events,” Choi said.

NZ issuers continue to tap Australia

Carolyn Ng, Head of Capital Markets New Zealand at ANZ, highlights how New Zealand issuers are increasingly turning to the Australian market. “Key New Zealand names are taking advantage of the liquidity and diversification the Australian market offers.”

Ng notes that issuing in Aussie dollars also opens access to the Asian investor base, which brings additional liquidity. “Our institutional market is smaller, and transactions can be more retail-focused, so tapping into Australia allows issuers to benefit from greater demand, especially from Asia.”

But Ng also made the point that the few issuances in the New Zealand market this year have received outsized demand because of the low volume.

Looking ahead

Both Choi and Ng expect the current momentum to continue. Choi sees issuers remaining nimble and opportunistic as they navigate rate and spread dynamics, while Ng anticipates more demand along the longer end of the curve.

“Retail investors are looking to lock in higher coupons,” Ng said. “Despite some crowding out from government borrowing, New Zealand companies are well placed to steer through any volatility towards the end of the year.”

As Australia’s bond market continues to attract regional interest and capital, its role as a central funding hub in Asia-Pacific looks increasingly secure.