A total of 46 of the ASX Top 50 companies issue bonds. This isn’t surprising as they are large international companies trading in foreign markets and require multiple sources of funding (see Table 1). But a couple of things did surprise me:
- 32 issued in more than one currency
- 15 do not issue in Australian dollars
- Generally, the miners issue in USD and neglect AUD, however BHP have a relatively small AUD1bn on issue
- Of the four who do not issue bonds, most invest in the bond market (see Table 2)
Source: FIIG Securities, Bloomberg, company reports
Table 1
Notes
1. Amcor: also issues in Swiss Franc (CHF) as stated in its 2016 annual report
2. AMP Bank: also issues in New Zealand dollar (NZD)
3. APA group: estimated AUD equivalent of total bonds issued in AUD, USD, EUR, British pounds (GBP), Canadian dollar (CAD) and Japanese yen (JPY).
4. ANZ: also issues in NZD, Hong Kong dollar (HKD), CHF, CAD, JPY and Chinese Renmenbi (CNY)
5. BHP: also issues in CAD
6. Brambles: USD equivalent of total loan notes as stated in its 2017 annual report. The company also issues in EUR
7. CBA: see Table 3
8. Insurance Australia Group: also issues in NZD
9. Mirvac: also issues in JPY
10. Macquarie: estimated AUD equivalent of total bonds issued in AUD, USD, EUR, GBP, CHF, YEN, CNY, HKD, NOK, CAD, KRW, ZAR, SGD
11. NAB: also issues in NZD, HKD, CHF, CAD, JPY and CNY
12. Stockland: also issues in HKD
13. Sydney Airport: also issues in CAD
14. Telstra: also issues in HKD, CHF and JPY
15. Transurban: also issues in CAD
16. Westpac: also issues in NZD, HKD, CHF, CAD, JPY and CNY
17. Woolworths: also issues in JPY
18. Woodside: also issues in CHF
Source: FIIG Securities, Bloomberg, company reports
Table 2
Overwhelmingly, financial companies issue the most bonds into the domestic and international bond markets. Combined, they make up 82% of AUD issuance and 63% of USD issuance.
Overwhelmingly, financial companies issue the most bonds into the domestic and international bond markets. Combined, they make up 82% of AUD issuance and 63% of USD issuance.
USD issuance at USD428bn is more than double AUD issuance at AUD193bn and when the AUD is converted to show a like for like comparison the US equivalent is circa USD145bn at an assumed exchange rate on 0.75 cents – that is, just over a third of the USD issuance (see Figure 1).
USD issuance by sector
Source: FIIG Securities, Bloomberg, company reports
Figure 1
The four major banks
According to our figures, NAB is the largest issuer in AUD – AUD42.57bn and also the largest euro issuer, while Westpac takes the trophy for the largest USD issuer with USD75.01bn. The CBA issued in the most currencies – 18, including the Mexican Peso, Israel Shekel and the Turkish Lira (see Table 4).
Source: FIIG Securities, Bloomberg
Table 3
Summary
There are many reasons why Australian companies issue in offshore markets. However, one of the key drivers would be the much greater demand and investor allocation to bonds in other countries. As the number of Australian bond investors increases, we are seeing more and more offshore companies issue into the Australian market with greater AUD bond issuance providing greater opportunities for investors as well.
Disclaimer: Our lists may not be complete. The tables are a ‘best effort’ based on Bloomberg data and annual reports.
