2020-04-04 IFR Asia

(Barré) #1

Australasia Inc seeks waivers

„ Loans Borrowers in Australia and New Zealand take steps to counter coronavirus threat


Corporate borrowers in
Australia and New Zealand
across a broad range of
industries are wasting no
time to shore up liquidity to
help their businesses survive
the economic shock of the
coronavirus pandemic.
While new-money loans
are limited, with a number
of mergers and acquisitions
cancelled or on hold, lenders
in recent weeks have been
busy arranging refinancings,
maturity extensions and short-
term funding for existing

Outdoor retailer KATHMANDU
HOLDINGS, outdoor advertising
firm OOH!MEDIA, travel
agent WEBJET and satellite
communications provider
among several companies that
have won temporary waivers
or amendments to their
financial covenants. Webjet,
Kathmandu and oOh!Media
have also raised or embarked
on equity fundraisings to boost
their liquidity, while Speedcast,
which counts the cruise
industry as an important client,
is seeking bridge financing as
it fights for its survival. (See
Australia Equity Capital Markets.)

SCENTRE GROUP, the owner
and operator of Westfields
shopping malls in Australia
and New Zealand, obtained
two-year unsecured bank loans,
raising its available liquidity to
A$3.1bn from around A$1.8bn
at the end of last year.
international student
placement and testing group
IDP EDUCATION and fertility
treatment provider MONASH IVF
GROUP are among those seeking
working capital facilities.
Spark completed two bilateral
loans totalling NZ$150m and
extended a NZ$200m standby

facility by one year last week.
IDP Education’s existing lenders
are providing a A$50m loan and
the company has also launched
a A$175m equity fundraising,
while Monash IVF is in
discussions with lenders for
obtaining additional funding.
WORLEY, which provides
project and asset services
to companies in the energy,
chemical and resources sectors,
extended its debt maturity for
12 months.
Africa-focused mineral sands
producer BASE RESOURCES has fully
drawn a US$75m revolver, while
gold producer SARACEN MINERAL
HOLDINGS is in talks with banks
about a potential drawdown
of its A$45m revolver in the
event of an imposed curtailment
or temporary shutdown of

Semis reopen Aussie market

Bonds States focus on floating-rate notes to meet balance sheet demand


Cash-strapped state
governments have reopened
the Australian bond market
with a flurry of floating-rate
deals tailored to current
buyside preferences.
In stark contrast to the
gang-busting revivals in the
US and Europe, Australia’s
primary market has been slow
to pick up speed as local asset
managers became net sellers
of bonds to help meet elevated
Further drawdown pressure
will follow the Australian
Prudential Regulation
Authority’s decision to allow
superannuation account
holders to withdraw up to
A$10,000 in early releases, in
both this fiscal year and next.
“The US and European
fixed-income markets are far
larger than Australia where
the dominance of equities
within fund portfolios puts
more pressure on managers
to free up cash through bond
sales to fund redemptions,” said
a syndication manager who

worked on one of last week’s
The retreat of asset managers
from the market has left bank
balance sheets as the dominant
buyside investor class Down
Under, where bank treasurers

are busy making reverse
enquiries to put their liquid
cash positions to work.
Liquidity levels have been
strengthened in part by the
Reserve Bank of Australia’s
A$90bn Term Funding Facility
(TFF), which gives authorised
deposit-taking institutions
(mostly banks) access to
funding for three years at a
fixed interest rate of just 0.25%.
The preference of banks for
short-term floating-rate assets

is one of the main reasons why
Australian states have shifted
away from fixed-rate long-term
bond sales that were prevalent
earlier this year.
Overall demand for
state government paper is

also supported by relative
value investors looking to
switch out of lower-yielding
Commonwealth government
bonds into another rare Level
1 high-quality liquid asset that
offers a better return.
ACGB yields have been
driven down by aggressive
Reserve Bank of Australia
purchases since it introduced
open-ended quantitative easing
on March 19 to meet a three-
year yield target of 0.25%.

For their part, Double A
and Triple A rated semi
governments are keen to access
wholesale funding having been
hit hard by the coronavirus
pandemic, which has sent local
spending soaring while tax
receipts, including stamp duty,
have dwindled as economic
activity contracts.
On March 19 Treasury
Corporation of Victoria
increased its April 2025 floater
by A$1bn at a margin of three-
month BBSW plus 38bp, while
Western Australia Treasury
Corp and Queensland Treasury
Corp have also been adding to
several of their outstanding
which recently announced a
A$2.3bn additional spending
package, sold FRNs for the
first time since 2015 with a
A$1.125bn tap of its February
2025s following a reverse
enquiry from its panel banks.
TCorp subsequently went
public with a dual-tranche
transaction on April 2
comprising a A$1.2bn 3.5-


8 International Financing Review Asia April 4 2020

The retreat of asset managers from the market
has left bank balance sheets as the dominant
buyside investor class Down Under, where bank
treasurers are busy making reverse enquiries to
put their liquid cash positions to work.


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