Accessing corporate debt alternatives

Accessing corporate debt alternatives

Global uncertainty and regulatory intervention has changed the dynamics of availability of credit for Australian corporate borrowers.

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A recurring issue for Australian corporates is the over-reliance on the Big 4 domestic banks, and the relatively small size of the domestic bond market. At times when global uncertainty gives rise to high volatility and higher prices, it can mean a notable lack of options.

This article, Accessing corporate debt alternatives, explores options of alternative debt markets that are likely to play a significant role in meeting the funding needs of many of these borrowers into the future. It covers:

  • the private placement market as an option to diversify sources of funding, particularly in the United States, but increasingly in Australia as well
  • the high price of bank lending and the contributing factors that have increased margins
  • looking beyond borrowing from the Big 4 banks to Asian banks that are making their presence felt.

Many alternative financiers have money available for the right transactions, but are able to be very selective about which deals they seek to pursue and are being quite opportunistic. The success or otherwise of such deals relies on the achievement of the borrower's stated strategies and forecasts, and appropriate debt structuring.

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