Australian companies to lift bond issuance in 2015
Australia's largest corporate borrowers are diversifying their sources of funding, with bonds a particular favourite at the moment, especially with interest rates in Europe set to "negative". That's one of the main themes to emerge from a poll of 50 chief financial officers, treasurers and other senior treasury decision makers working at BBB and A-rated companies in Australia, revealed in the latest BNP Paribas' Corporate Borrowers' Intentions report."One-third of respondents said they expected to increase their proportional use of capital markets funding in the foreseeable future," said Didier Mahout, CEO Australia and New Zealand at BNP Paribas. The bank said the results of the survey "challenge the commonly held notion that Australasian corporates are reliant on bank funding, with the investment-grade sector disclosing an increasing bias towards debt capital markets." Other notable findings from the survey were: • Only two per cent are funded entirely by bank loans (ie, one corporate treasury out of the 50 polled).• The domestic market remains the most popular market for corporates, with almost three-out-of-four (72 per cent) of treasuries active in Australian debt capital markets.• Over a quarter of survey respondents say their company's debt is already 'largely' funded in capital markets, while an identical proportion say their debt book comprises a mix of bank and capital markets funding but weighted towards the latter.• The US private placement market is the most favoured offshore market (45 per cent of respondents) and demand for US private placement market is expected to increase the most in 2015.• Up to 20 per cent of corporate treasuries said they are looking to offshore capital markets for future funding, in addition to 20 per cent already active in the euro markets.• More than 90 per cent of survey respondents said they issue bonds or other debt securities at least once every two to three years, and nearly 60 per cent are active on at least an annual basis.