AFMA's comprehensive review of the financial year, the 2017 Australian Financial Markets Report, was published this week, with contributions from in-house experts in the major banks and trading houses."There are three key themes we are seeing in the Australian domestic market," wrote Steve Lambert, executive general manager corporate finance, corporate and institutional banking, National Australia Bank."Firstly, the continued rise of the importance of Asian investors; secondly, the rise of the power of self-managed superannuation with the growth of non-institutional investors in the domestic bond market."Both of these themes also impact on our third theme, increased innovation."When it came to innovation, Lambert was quick to push his bank to the forefront, choosing NAB's green bond program, with the first green bond from any commercial bank issued globally at the end of 2014, by way of example."In 2015, NAB's initial transaction was replicated by other banks both domestically and offshore. In 2016, the green bond market stepped up another level, we arranged the first green certified securitisation transaction for Flexigroup and the first green bond from an Australian Government Authority, Treasury Corporation of Victoria. "This was followed in March 2017, when Queensland Treasury Corporation issued a green bond and NAB printed the first offshore green bond from an Australian issuer."Lambert and his NAB capital markets colleagues also turned their analysis to loan markets.Looking at overall statistics year to date, the Australian loan market has been subdued versus previous years with YTD volume down approximately 20 per cent compared to the same time last year, a similar experience across the Asia Pacific region.The decline has been due to a combination of factors:•    low credit growth resulting in a lack of demand by the corporate sector for credit;•    reduced level of refinancing due to significant refinancing occurring over the last few years; and                                                                                                                                                                                                               •    increased loan pricing making it less conducive for borrowers to refinance early compared to previous years.Although loan volume was down significantly, the year was active with an increase in new money deals that have been a combination of additional funding raised by corporates; M&A and privatisation. These transactions have been meaningful in volume with strong support by banks.The Australian loan market also experienced an increase in new banks establishing a branch in Australia, improving local liquidity available to Australian borrowers. Most of the banks that established a presence were of Taiwanese origin.Banks have also been increasingly affected when confronted by Australian loan market pricing, with the cost of additional capital raised to meet increased prudential requirements imposed by regulators.The ability of banks to pass on increased costs has been limited due to continuing strong liquidity and subdued market volume."Banks have been increasingly balancing the level of commitment provided to borrowers with the overall relationship, given the increased cost of capital," wrote Lambert.This is resulting in syndicate composition broadening, to include other banks or non-bank investors (institutions and funds) from across the region, Lambert insisted."Often these new investors are more passive. This approach allows for a more balanced lender group to