By Scott Murdoch

SYDNEY, Feb 26 (Reuters) - Australia's growing pension system is helping fuel record issuance in the A$ bond market this year, a trend National Australia Bank NAB.AX (NAB) CEO Andrew Irvine expects to be maintained as global borrowers tap deepening pools of domestic liquidity.

There have been A$52.74 billion, or $36.21 billion, of A$-denominated bonds issued since the start of 2026, the best-ever start to any year, according to Dealogic figures. The issuance is up nearly 11% compared to the same time last year in A$ terms.

Irvine said A$ bonds were becoming more attractive to Asian and European issuers as Australian pension funds, known locally as superannuation funds, become increasingly active purchasers, improving market liquidity.

For example, Hong Kong's MTR Corp 0066.HK issued A$2 billion of green bonds in January, its first in A$.

Australian pension funds receive A$4 billion of inflows each week, according to industry figures, making it the fourth-largest retirement savings system in the world.

"That's creating a bigger and more liquid capital market, which means issuers can offer or take advantage of all sorts of different duration instruments and get good pricing," Irvine told Reuters in an interview on Thursday.

"That's attracting more people issuing in Australian dollars or kangaroo bonds, and it's also attracting more investors because of the increase in product and the good pricing that they're able to achieve.

"It's kind of a virtuous cycle and I see that continuing in the foreseeable future."

Australian employers must now contribute 12% of a worker's earnings into a pension fund, boosting inflows received by the industry.

Pension contributions totalled A$221 billion in 2025, up 11.5% on the year, while benefit payments grew 12.5% to A$140 billion as more Australians hit retirement age, regulatory data showed on Thursday.

Irvine said the A$ bond market was heading towards becoming globally significant after being regarded as a relatively small issuing jurisdiction in the past.

"As more Australians are getting closer to retirement, they're going to need more fixed-income securities that provide them with retirement income," he said.

"So you're going to see a little bit of a move away from growth products to income products as Australians age."

NAB is currently hosting a two-day capital markets conference in Singapore.

(Reporting by Scott Murdoch; Editing by Jamie Freed)

((Scott.Murdoch@thomsonreuters.com;))