Chapman Tripp’s NZX Top 50 Funding Composition – trends and insights reviewed the debt funding mixes of the 50 largest companies on the New Zealand Exchange Main Board (NZX), as reported in their latest annual reports.
The report shows good diversity of debt-funding among the top 25 listed companies, and this trend is expected to continue this year. It is consistent with global shifts where large companies are issuing bonds and decreasing their dependence on banks’ economic issues.
This financial approach would be further reinforced with the signalled changes in New Zealand’s banking market, tighter availability of bank funding and with the Reserve Bank’s proposal on the financial system and wellbeing. As such, we note that only 20 percent of the top 25 entities relied solely on bank funding – compared to the second 25 companies, bar a few exceptions, which are entirely dependent on banks for debt funding.
We predict that in 2019, corporates will remain very conscious of the need for a range of funding sources, and another two to three of these entities will enter the debt capital markets for the first time, as their businesses grow.