TCorp announces oversized borrowing programme

The semi-government authority will raise A$7.6 billion in debt in the next 12 months, including about A$3 billion from Japanese investors.

The NSW Treasury Corporation has announced an A$7.6 billion ($5.77 billion) borrowing programme for the 2005/2006 financial year. The programme is larger than usual due to the maturity of a May 06 benchmark bond worth A$5.2 billion.

The total package is made up of A$7.5 billion needed to refinance existing bonds and A$3.1 billion in new funding needed for its public sector borrowing clients.

About A$3 billion of the total annual requirement has already been raised through a pre-funding programme, says Stephen Knight, the agency's general manager of treasury and deputy chief executive.

"In anticipation of the large refinancing requirement for the 2005/2006 year and given the favourable funding conditions that prevailed last year, we took the opportunity to pre-fund some of the coming year's needs," he says.

Knight says the agency's funding strategy continues to centre around the maintenance of large, liquid lines of benchmark bonds and that the total benchmark bonds on issue, both domestic bonds and global exchangeable bonds, have increased to around A$22 billion over the past year.

TCorp is remaining tight lipped, however, on when and how the May 06 benchmark bond will be refinanced. "This will be determined by a number of factors such as investor preference, market conditions and funding requirements of TCorp's client authorities," he comments.

He says the agency's outstandings in global exchangeable bonds continued to grow last year. "This reflects offshore demand for Australian dollar securities," he says. TCorp has more than doubled its outstanding global exchangeables in the last two years to more than A$7 billion.

A lot of this money has been raised from Japanese investors. "Looking ahead we expect to continue to source the majority of our offshore funding requirement from this market," says Knight.

He says the agency's long-term target is to maintain an onshore/offshore funding mix of around 60/40.

In the 2004/2005 financial year, TCorp borrowed A$2.9 billion to refinance existing securities and A$1.3 billion in new funding requirements (plus the A$3 billion in pre-funding for 2005/2006).

is the central financing authority for the New South Wales public sector, and is a leading issuer of semi-government securities in the Australian market.

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