NSW Treasury Corporation Annual Borrowing Programme FY08-09

 

 

NSW Treasury Corporation’s (TCorp) funding requirement for 2008/09 is forecast at $4.9bn, reflecting the new funding requirements of $6.8bn for public sector clients and $1.6bn to meet the refinancing of maturing liabilities. Maturities to be refinanced in 2008/09 are substantially lower than in 2007/08 given that there is no Benchmark Bond maturing in the year. Favourable funding opportunities, and a lower than forecast client core funding requirement over 2007/08, has enabled TCorp to prefund $3.5bn of the 2008/09 funding requirement.

TCorp’s funding strategy over 2008/09 will continue to centre on maintaining large, liquid lines of Benchmark Bonds (incorporating Domestic Bonds and Global Exchangeable Bonds). Following the successful launch of the Capital Indexed Bond programme over 2007/08 new issuance of $0.6bn to $1.0bn will be targeted from this sector. Where offshore markets can be accessed to source funding at margins below the Benchmark Bond curve, these opportunities will be used to diversify TCorp’s funding base. Whilst over recent years TCorp’s utilisation of its Domestic Promissory Note Programme has been limited to assist with managing the maturity of the large Benchmark Bond series, it is anticipated that over 2008/09 it will be used to assist in smoothing the core funding requirements of clients.   

Over the 2007/08 financial year, TCorp’s required funding task has been met by increased issuance of Benchmark Bonds reflecting strong investor demand from both domestic and offshore investors following the impact of the global credit crisis. This demand enabled the $5.6bn maturity of the March 2008 Benchmark Series to be refinanced into longer dated maturities. In addition, a further $2.2bn of new issuance was undertaken with total programme outstandings of the Domestic ($14.4bn) and Global Exchangeable ($15.0bn) now totalling $29.4bn at 31 May 2008. Since the announcement of the establishment of the Capital Indexed Bond programme in November 2007 a total of $0.9bn has been sourced from this sector. In addition Domestic Promissory Note outstandings currently are $1.3bn. Over 2007/08 opportunities to source funding from offshore investors in non Benchmark markets at savings to the domestic curve were very limited.