Maturities will add to elevated deal flow
Strong investor demand for corporate bonds is expected to ensure the fourth quarter of 2009 will continue to see high rates of issuance and this should flow into next year. Not only will increasing risk appetite drive investor demand, but so also will the substantial volume of annual maturities that are now starting to come through. Maturities in 2010 total A$50.2 billion, compared with only A$42.4 billion flowing through this year. In 2011, maturities already total A$61.7 billion and in 2012 the volume of maturities already in the pipeline is greater still. This is the natural outcome of the steady build-up in issuance in the earlier years of this decade.Nevertheless, maturities can have an uneven impact on the market, depending on whether investors focus on forthcoming maturities or those up to a year out. This will be determined by how individual portfolios are managed. But for those with a shorter-term focus, the next big month for maturities is March 2010 with A$8.6 billion of corporate bonds falling due. March is followed by July 2010 with maturities amounting to A$8.8 billion.In the meantime, the continuing credit spread contraction will also encourage other issuers to come to the market - the regional banks (without a government guarantee) and more true corporate issuers come to mind.