Global treasurers have fueled a record A$36 billion ($24 billion) in Kangaroo bond sales during the first half of 2026, marking a significant increase from the A$28.2 billion in sales during H1 2023. This record issuance was driven by strong demand from international institutions and pension funds, attracted by the attractive yields and stability of the Australian market. This surge in activity includes new participants like Canadian provincial issuers, contributing to a more diverse issuer base.
The Canada Pension Plan Investment Board (CPP Investments) played a key role in this record, with its A$3 billion five-year offering in early 2026 setting a new record for the largest Kangaroo bond and attracting an unprecedented A$16.3 billion in orders. This surpasses their previous record of A$2.5 billion set a year prior. Sam Dorri, CPP Investments managing director, highlighted the substantial growth in the Australian market, emphasizing that "flows beget flows," and noting the attractive yields and high government pickups.
Despite a global bond sell-off in late 2025 and 2026, which saw U.S. Treasury yields rise above 4.5% and the S&P 500 fall, the Kangaroo market has maintained its appeal. The CPP Investments bond, for instance, priced at a yield of 4.795%, offering a 51bp pickup over the Australian sovereign. This margin was 10bp–13bp more than other SSA Kangaroo issuers like KfW and Asian Development Bank, which priced at 39bp and 40bp over asset swaps respectively, providing a compelling pitch to investors.
The investor base for these bonds is increasingly diverse, with 78 investors participating in the CPP Investments bond, including new official institutions and corporate investors. Australia and New Zealand accounted for 43% of the buyers, EMEA 28%, Asia 24%, and the Americas 5%. Asset managers were the largest allocators at 55%, followed by official institutions at 30%, bank treasuries at 8%, and hedge funds at 7%. This broad demand validates Australia's position as one of CPP Investments' core funding markets, where it plans to raise C$7 billion–$8 billion annually.
Analysts like those at Deutsche Bank pointed to the attractive pricing and CPP Investments' strong track record as key factors for success, even expressing surprise at the unprecedented scale of demand. While the spread over Aussie government bonds is substantial, the cost of funding for CPP Investments in Australia remains comparable to the U.S. and Canadian dollar markets. This robust market performance underscores the growing confidence in Australia's financial stability and the increasing maturity of its debt market.
