The role of the domestic market
The Australian dollar bond market has quietly become more reliable for corporate issuers while also adding to its utility in range of tenors and liquidity. Sustainable-finance options have helped further. Issuers reflect on the value of local bond funding.
TRIGONA When we were embarking on debt capital market issuance, the feedback we received was that there was limited capacity to raise funds in the domestic market. But we have issued close to A$2.8 billion (US$2 billion) in Australia over the last 12 months and we are very positive going into the new calendar year.
We have issued twice in the US dollar market since April 2021, in five tranches. The strong support from offshore investors has grown our investor base significantly and we are seeing some of these accounts, including central banks, invest in our domestic issuance. The offshore bid should support our domestic issuance in future.
RAHMAN The domestic market has deeper foundations nowadays. Ramsay Health Care was exclusively funded by bank loans until recently, then we decided it was time to proceed with obtaining a credit rating in May this year. It is rare to do this unless there is an intention to access the bond market and it is time for us to diversify away from a purely bank-funded debt book to a combination of bank loans and bonds.
My view has always been that long-term assets should always be funded by long-term liabilities – such as bonds and even equity – while working capital should be funded with revolving bank loans or debt we know will be repaid soon, minimising liability-management costs.
We consider it important to have a bond programme that can accommodate the domestic market. It is a great market and always a good thing to be supported by and to support it.
It is a fact, however, that the Australian dollar market remains a bit more binomial in that it has a tendency to shut down unilaterally while others are open for business. Going to the US, in a worst-case scenario we might have to pay for a deal – but we would always come back with the money we needed.
It is therefore important to have a domestic bond programme that is rated and ready to go, so we can access it opportunistically when conditions are buoyant. I like to think the domestic market, which is our home turf, will be able to work with us in this regard.
It is a funding option we would be cautious and opportunistic about, though. We have a strong business in Europe so the euro market is also available to us. But it would be remiss not to be open to the Australian market, which is a great option.
VANDELIGT Other than in the most severe market deteriorations, we have a high level of confidence in the Australian market. Each deal I have been involved with has seen growth in ticket sizes and investor numbers.
When we were embarking on debt capital market issuance, the feedback we received was that there was limited capacity to raise funds in the domestic market. But we have issued close to A$2.8 billion in Australia over the last 12 months and we are very positive going into the new calendar year.
