Companies turn to retail bond markets
Australian companies are increasingly turning to the retail bond market to directly obtain part of their financing requirments, according to industry newsletter, Dealogic.
Dealogic reports that the Australian debt market is now the source of 8.3% of the bonds issued by Australian non-financial sector companies. This compares with only 6% of total bonds in calendar 2010 and only 3.5% in 2009.
Major companies including Woolworths are using their strong balance sheets and high public profile to raise money at a lower rate than the banks are able to provide.
To date, Woolworths has raised $50 million worth of five year bonds in the Australian market, according to the Australian Financial Review. Commentators say the trend could impact on the banks’ share of the big corporate market which traditionally has been a lucrative source of their profits.