BNP Paribas head of debt capital markets Kate Stewart said high-volume funding with a maturity of seven years or longer is currently looking very attractive.
“Australian companies can now borrow long-term money in Europe and swap it back into Australian dollars at competitive interest rates,” Ms Stewart said.
These could be as low as four per cent to six per cent depending on the rating, volume required and maturity, she said.
There are several reasons behind the strong demand in Europe for debt issued by Australian investment grade and non-investment grade companies, Ms Stewart said.
“Negative deposit rates in Europe have made the yield offered by corporate issuers very attractive to investors there,” she said.
“The euro market is also experiencing negative net issuance, with the volume of bonds maturing and redemptions exceeding the amount of new issues.”
A lack of mergers and acquisitions requiring funding has also contributed to the shortage of issuance, Ms Stewart added.
“Australian issuers tend to be well regarded in Europe and are seen as a way to add diversification to an investment portfolio, she said.
Corporate clients of BNP Paribas Australia have raised over $10 billion in the past six months from Europe, with bond issues from Brambles, Scentre, Sydney and Melbourne Airports and Wesfarmers.
