New Zealand corporates remain happy raising capital in their own backyard with Australia only in the frame as a distant prospect, according to a new survey by BNP Paribas and Moody Investor’s Service.
The survey, which tapped into CFOs and treasury decision-makers in about 50 investment-grade Australasian corporations, found just 18 per cent of NZ companies expected Australia to offer good lending conditions in 2016.
“By contrast, every respondent from New Zealand expects their domestic market to offer the best combination of conditions next year, while nearly three-quarters expect USPP [US private placement] to join it,” the survey says.
New Zealand traditionally offers favourable capital-raising terms for local corporates with strong retail demand often bidding down credit spreads.
About 9 per cent of those NZ companies surveyed were currently sourcing debt from Australia compared to 82 per cent in their home market, 55 per cent in the US and 18 per cent in Europe.
However, about 80 per cent of NZ companies in the survey said Australian debt issues were a “long term prospect”.
“Perhaps the most interesting insight the survey offers in this respect is that more than half of New Zealand issuers say they either are engaged or may engage with the Australian domestic market at some point,” the survey says.
Only 5 per cent of Australian companies raised debt from NZ in 2015, down from 9 per cent the previous year, the study shows.
The survey suggests the Australasian corporate debt market “softened noticeably, but not drastically” over the 12 months to the end of September this year.
“Asked to rate a number of factors in terms of the ease or difficulty with which they are dealt when accessing debt capital markets, the most noticeable trend from 2014 to 2015 is the migration of responses from ‘very conducive’ to ‘fairly conducive’,” the BNP/Moodys study says. “While hardly a suggestion of impending catastrophe, this is clearly a morenegative outlook than the previous year.
“Where 90% of Australasian borrowers rated availability of liquidity as highly conducive in 2014, in this year’s survey the equivalent proportion fell to 38%.”