Global Treasurers Fuel Record $36 Billion of Kangaroo Bond Sales

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(Bloomberg) — Australia’s bond market is drawing increasing interest from funding chiefs worldwide, pushing issuance to a record high, as a flood of Asian capital cap borrowing costs and compete for deals.

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Overseas borrowers, including Commerzbank AG and Engie SA, sold a record A$52 billion ($36 billion) worth of bonds in the so-called Kangaroo market during the first half of 2026, with bids often outstripping supply. That’s about one-third more than raised in the same period a year earlier, according to data compiled by Bloomberg. 

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Borrowers are benefiting from growing demand among both foreign and local investors, including large pension funds, which helped more than triple the size of the market since the pandemic. Cash has flowed into Australia from the region as Chinese US dollar-denominated debt issuance dwindled following a housing market implosion, forcing investors to seek new investment opportunities.

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“I have had calls from treasurers at other issuers asking about it because they are thinking of tapping” the Australian market too, said Fabian Lander, head of corporate finance and treasury at Vonovia SE, which priced its second deal in May. “We have no business activity Down Under, so the pure rationale for the deal was diversification.”

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The investor interest is helping issuers diversify their source of funding away from the dollar and the euro, while capping costs. Aroundtown SA, a European real estate company, which raised A$600 million in January, priced its longer-dated debt at lower than it would have in the European common currency due to strong demand, according to Timothy Wright, chief capital markets officer.

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Australia has some of the highest interest rates in the developed world following an aggressive tightening campaign by its central bank, which is a draw for some yield-sensitive investors. From an overseas issuer perspective, however, many still find borrowing in Aussie dollars cheaper or comparable to raising funds in their home market.

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‘Third Pillar’

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In June, a subsidiary of Spain’s Telefónica SA, French energy company Engie and Commerzbank priced their inaugural Kangaroo bond offerings. Engie got more than A$4.3 billion in demand for its A$1.25 billion three-part bond sale, which included a rare subordinated note by an overseas non-financial corporate. 

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Other new issuers this year included Hong Kong mass transit operator MTR Corp. and Spain’s CaixaBank SA. While European companies have been the single largest group of borrowers, US names have included Oncor Electric Delivery Co. and Verizon Communications Inc. 

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“Quite a number of issuers are saying this is their third funding pillar after the euro and dollar markets,” said Daniel Leong, head of Australian dollar syndicate at Mizuho Securities. “A European or US corporate can come and do a transaction in Aussie dollars, and that potentially reduces the need to do an additional deal in their home market. It’s a release valve for some of these large global borrowers.”