A more cautious approach to capital within banks and higher interest rates, coupled with greater diversity of funding sources available, have driven several of the top 50 NZX-listed companies to look elsewhere for some of their funding, says Chapman Tripp.
The firm’s NZX Top 50 Funding Composition – trends and insights report, out today, reviewed the debt funding mixes of the 50 largest companies on the NZX (as reported in their latest company annual reports).
Chapman Tripp finance partner Cathryn Barber said the report shows most top 25 listed companies have a diverse mix of debt funding and she expects this trend to continue this year.
The report found only 20 percent of the top 25 issuers relied solely on bank funding – compared to the second 25 companies, bar a few exceptions, which are entirely dependent on banks for debt funding.
“Companies that have a diverse mix of debt-funding are better able to deal with upcoming changes in New Zealand’s banking market, such as margin increases or the Reserve Bank’s capital requirements limiting bank appetite, even if we can expect most of the top 25 companies likely to obtain a high proportion of their debt from New Zealand banks.
“This is consistent with global trends where large companies are issuing bonds and decreasing their dependence on banks’ economic issues,” added Barber.