RIETHMULLER Last year the loan market was about four times the issuance volume of all debt capital markets for Australian issuers. Loan volume was up close to 20 per cent year-on-year. We have seen a broadening of the bank-loan market in the sense of increased appetite from foreign lenders in Australia, as well as more activity from Asian banks offshore.

There is also an increasing level of interest offshore for longer tenor. The local bank market is predominantly a five-year market, going up to seven years. But we’ve seen a growing level of appetite in Japan, which can see tenors out to 15 years with similar pricing to the USPP market. The Japanese investor base, primarily of banks and insurers, continues to grow and is broadening the range of sectors it will invest in.

The loan-market product is also reasonably straightforward and consistent to existing documentation with certain structural advantages.

RIETHMULLER Yes, although size is an issue in Japan. Issuers won’t get the same size of funding out of the Japanese loan market as they can get in the USPP market. There is definitely a greater level of liquidity in longer tenors in the USPP market and also broader investor appetite across different sectors.

Having said this, the market is evolving and the Japanese regional banks and insurers are receiving greater investment allocations particularly into Australian dollars. This will help support future issuance.

LEWIS There’s still very attractive pricing in the bank-loan market. We recently saw – for the first time – multiple offers for seven-year bank funding at margins well within those of the USPP market, with all the flexibility of bank debt.

We’re not sure whether this is now a permanent feature of the market or whether it just reflects the cycle we’re in. The seven-year bank-loan market is certainly not as deep as the USPP market and therefore only makes up a relatively small part of our overall financing mix.

What we have seen is a big change with our domestic banks, which are trying to reduce their funding and have put up their pricing. Asian banks, on the other hand, are being quite aggressive on pricing.

There’s still plenty of liquidity at attractive pricing for the right credits, and it hasn’t been affected yet by global dynamics. Everyone is talking about funding pressures and therefore pricing increasing, but from our perspective it hasn’t happened so far.

RIETHMULLER Looking at the big-four Australian banks, the return metrics for their retail businesses are at a premium to their institutional businesses. We’re seeing a level of capital move from institutional books into retail books.

The other thing that has happened locally is the Royal Commission into Misconduct in the Banking, Superannuation and Financial-services Industry. This has taken a lot of management time from the big four.

Most have been rationalising different parts of their wealth and banking businesses to focus on more traditional retail businesses and leaner institutional businesses. These dynamics will raise opportunities for offshore funding and foreign funders.

NOLAN We did a bank refinancing at the back end of last year. We got very good pricing and we were able to refresh our liquidity lines completely. This is great as it gives us plenty of flexibility in the short term – particularly for capex and acquisition.

However, as a long-dated infrastructure asset we still see the need for long-dated debt. I’m not seeing the bank market as competing. It’s complementary.

ITALIANO We also refinanced in the bank market at competitive rates last year. This gave us a breather as we are three years into a privatisation. However, like Pacific National, ultimately tenor will always be important for us.