Emirates NBD Targets A$10-Year Kangaroo Bond Amid Strong Investor Demand
The bond would be senior unsecured debt with an indicative coupon of around 6.00%, pricing in line with a potential yield of approximately 6.05%. The issuance is scheduled for pricing on 11 June, with Emirates NBD Capital, Mizuho and Nomura appointed as joint lead managers and bookrunners, signalling robust global distribution capabilities.
Australia's Kangaroo market, known for inviting foreign issuers to raise AUD-denominated funding, continues to attract significant interest from international banks seeking to diversify investor bases. Emirates NBD previously tapped this market in February 2023, successfully raising A$450 million with a 10-year bond at a coupon of 6.1%, which translated to a yield of 6.122%, with lead syndicate roles shared by ANZ, Emirates NBD Capital, JPMorgan and Nomura.
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Emirates NBD's decision aligns with broader shifts in global capital markets, where yield-seeking investors have increasingly turned towards emerging markets and non-domestic issuers. With global central bank rates remaining elevated by historical standards, the return profiles for emitters such as Emirates NBD remain competitive and compelling relative to their credit quality.
In issuing under its A$4 billion programme, Emirates NBD gains operational efficiency and flexibility, enabling quicker access to Kangaroo debt markets across multiple tranches and tenors. This is increasingly important as the bank seeks to balance its funding mix and hedge foreign exchange exposures, while also responding to investor demand for Australian dollar-denominated debt.
The joint appointment of Emirates NBD Capital, Mizuho and Nomura suggests a balanced distribution strategy spanning Middle Eastern, Asian and Australian investor bases. Mizuho and Nomura bring strong regional connections, while Emirates NBD Capital reassures existing institutional clients and opens up Gulf-based connections. These partners typically assist in roadshows and investor education, critical to achieving desired guidance levels within a tight spread band.
The announced IPT of ASW +195 is slightly tighter than previous placements, including the +200 bps initial range for the issuer's 2023 Kangaroo issuance. That earlier deal priced at about +190 bps over semi-annual swaps, reportedly oversubscribed and closed near the high of guidance at +190 bps. This signals both confidence from investors and the bank's ability to leverage its credit rating improvements and market familiarity among bond buyers.
Emirates NBD's credit ratings—A1 from Moody's and A+ from Fitch—are stable and investment grade, contributing to investor trust. The structure of the bond, senior unsecured, ensures it ranks equally with the bank's other senior debt instruments, offering a transparent risk profile. This clarity is increasingly valuable in a fragmented global debt landscape.
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From a broader perspective, the Kangaroo bond market remains an attractive source of funding for non-Australian issuers. Despite global economic uncertainty and central banks in developed markets maintaining restrictive stances, Australia continues to offer a relatively deep and liquid market for AUD debt issuance. Borrowers such as Korean and UAE banks, supranationals, and corporate issuers have consistently returned to Kangaroo markets, with transactions spanning green and social bond categories. The presence of repeat issuers, like Emirates NBD, demonstrates the market's capacity to absorb benchmark-sized offerings and incentivises future jumbo deals.
The bond's expected settlement date coincides strategically with market calm, ahead of potential volatility later this month. It allows the issuer to lock in yields and spreads before any shifts by the Reserve Bank of Australia or international central banks may influence market tone. Market participants note that Kangaroo bond spreads have tightened modestly year‑to‑date, reflecting a combination of steady demand for AUD assets and limited supply, as domestic issuers remain cautious about issuance volumes.
Investors are closely analysing the macro backdrop as well. With Australia's inflation rate cooling but still above target, and rate cuts yet to be firmly priced, the yield curve remains attractive. At the same time, credit spreads for Gulf-based issuers have narrowed following positive ratings actions earlier in 2025—including recent upgrades to Emirates NBD's long-term foreign-currency rating by Moody's and reaffirmation from Fitch.
Emerging-market bond funds and Australian institutional investors have strengthened allocations to foreign bank bonds over the past two years, partly driven by yield differentials. The A$ mandate from Emirates NBD therefore arrives at a juncture when sources of long-dated, investment-grade AUD debt remain limited: Australian domestic issuers primarily focus on shorter tenors, while many supranationals have paused issuance.
Within that context, the expected coupon of 6.00% positions Emirates NBD within line with peer Gulf and Asian issuers, though still appealing versus domestic equivalents. The pricing strategy—fixed coupon yielding slightly above the indicative spread—indicates modest downward flexibility built into the range, suggesting confidence in investor appetite.
The syndication strategy also reflects a desire to balance pricing certainty with market reach. As joint bookrunners, Emirates NBD Capital, Mizuho and Nomura will engage with global buy‑side accounts, including Australian super funds, asset managers and credit hedge funds looking to overlay returns in a higher‑yield environment.
Observers view this Kangaroo issuance as both a statement of strategic intent by Emirates NBD and a confirmation of investor trust in the bank's creditworthiness. By revisiting the 10-year tenor after a two-year hiatus, the bank signals comfort with reengaging long-term markets amid evolving economic trends.
Prospective investors will closely monitor investor feedback during this week's marketing phase. A well-received launch—evidenced by an oversubscription or tightening of final pricing to below the IPTs—may encourage further Kangaroo tranches later this year, potentially expanding tenor or volume.
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