Debt Market Update: Q1 2016

Debt Market Update: Q1 2016

The Australian debt markets experienced a slow start to 2016 with loan volume, although first quarters are typically quiet. Whilst supported by some larger M&A transactions, loan growth was weak with the outlook for the remainder of the year uncertain given global volatility and higher margins flowing to borrowers.


Also on

Overseas markets experienced similar volume declines driven by lower activity from sub-investment grade borrowers impacted by the substantial fall in commodity prices (principally oil) and the higher yields required given elevated solvency concerns.

Key themes

  • Australian bank debt market – typical slow start to the year, although local market holding up better than offshore.
  • Australian bond market – exceptionally low volumes driven by uncertainty and higher margins.
  • US private placement market – declines in aggregate volume through weaker issuance from lower-rated borrowers.
  • Interest rates – historic lows for longer from the US, with Australia decreasing by 25 bps to an historic low of 1.75 percent in May 2016.

Australian syndicated loan volume

Source: Loan Connector (data extracted April 2016), KPMG Analysis

Australian syndicated loan volume, LTM by sector (US$b)

Source: Loan Connector (data extracted April 2016), KPMG Analysis

Debt Market Quarterly Update

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