Canada’s Desjardins Eyes Australian Bond Market for Debut

Canada’s Desjardins plans its debut issuance in the Australian bond market, marking a significant step in its international financial strategy.

Desjardins Group is poised to make a strategic foray into the Australian dollar bond market, a move that underscores its ambition to diversify funding sources amidst the burgeoning demands of its lending portfolio. Yassir Berbiche, the head of treasury at Desjardins, articulated this intention during an interview, emphasizing that tapping into the Australian market would not only enhance its financing avenues but also enrich the yield curve and broaden the investor base. This revelation emerged during an industry event in Portugal last week, where Berbiche shared insights into the cooperative's financial maneuvers.

The Canadian financial giant has already conducted two investor roadshows in Australia over the past two years, signaling its commitment to establishing a presence in this lucrative market. Berbiche indicated that future transactions could manifest as recurring offerings of senior notes or covered bonds, anticipated at intervals of 12 to 18 months. “When we open a new jurisdiction, we are committed to come back,” he remarked, hinting at a long-term strategy rather than a fleeting dalliance.

Desjardins has been aggressively expanding its lending operations, particularly in the realms of corporate loans and residential mortgages, at a pace that has exceeded initial projections. The residential mortgage sector, in particular, is experiencing a notable acceleration, driven by declining interest rates and a surge in housing demand fueled by population growth. To support this ambitious growth trajectory, Desjardins has successfully raised C$11 billion (approximately $8.09 billion) in the bond markets thus far this year, significantly surpassing its original target of C$8 billion for 2024, as noted by Berbiche.

The cooperative's most recent endeavor involved a €500 million ($556 million) five-year green bond issuance, which attracted a remarkable 95 investors—a record for any single debt issuance from the organization. This achievement underscores the growing appetite for sustainable investment options among institutional investors.

In the backdrop of these developments, the Bank of Canada has implemented three interest rate cuts since June, reducing the benchmark overnight rate to 4.25%. These cuts are part of a broader strategy aimed at revitalizing the housing market, particularly at a time when Canadian households are grappling with the challenges of rising interest payments. As inflationary pressures begin to ease, the prospect of further rate reductions looms on the horizon, potentially providing additional impetus for the housing sector and, by extension, the lending activities of institutions like Desjardins.