Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


NZ business and public sector organisations rethink debt

Tuesday 26 February 2013
News Release
New Zealand business and public sector organisations rethink debt

New Zealand businesses and public sector organisations are being more prudent in their approach to debt management than before the global financial crisis, shows the latest PwC’s New Zealand Debt Survey of organisations with $50 to $500 million of outstanding debt.

PwC Partner Roger Kerr says, “Debt management remains a significant area of focus for most New Zealand businesses and public sector organisations.

“Interestingly, and unlike the situation experienced during the global financial crisis (GFC), the issue isn't that borrowers are worried banks will be reluctant to lend money, rather organisations and their Boards are more aware of the risks associated with debt.”

PwC interviewed more than 80 New Zealand respondents representing organisations with a combined $16.6 billion of outstanding debt, or an average of $195 million per organisation. The idea behind PwC’s survey was to better understand how organisations, often with limited treasury resource, make decisions about debt management.

“Organisations well remember how difficult times were during the GFC. With current economic woes, it’s pleasing to see New Zealand entities are acting with greater prudency.

“Of course, this translates into some companies putting the brakes on aggressive expansion plans as they take a wait-and-see approach which impacts economic growth,” says Mr Kerr.

Many organisations have taken steps to reduce risk to their debt funding activities and mitigate the impact of any sudden deterioration in funding market conditions.

“We found some companies are refinancing well in advance of their needs and want to avoid showing debt as current in their financial statements,” adds Mr Kerr.

PwC Partner and Banking Sector Leader Sam Shuttleworth agrees with the survey’s finding that banking relationships are often historically based.

“Banks are very good at understanding their clients’ needs around funding and when to engage with them about funding requirements. The survey confirms most organisations are unlikely to change if a bank has shown the ability to lend through economic cycles without major changes to pricing, availability and terms and conditions.

“The survey found organisation’s greater prudency is also showing in the way organisations are building back-up in their banking facilities. So, instead of using two providers, some are beginning to engage the services of a third, and this approach has the added advantage of injecting further competition in an already competitive market,” adds Mr Shuttleworth.

Between private and public sector organisations, Mr Kerr says there is a marked difference in the way organisations approached their funding needs.

“The local government sector makes greater use of debt capital markets and is more likely to have or be considering obtaining a credit rating.
“With the recently established Local Government Funding Agency, councils have an additional funding option and can now generally access funds at cheaper rates than they could borrow in their own name. This is good news for councils and rate payers," concludes Mr Kerr.

-End-

PwC_publication_Oiling_wheels.pdf

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Employment: ANZ Proposes Casualisation In Whangarei Stores

ANZ workers in Whangarei could see their incomes drop by 20 to 40 percent if the bank’s proposal to reduce the number of full-time positions goes ahead says FIRST Union national organiser Tali Williams. More>>

Finance: BNZ Develops Specialist Tāmaki Māori Banking Team

BNZ develops specialist Tāmaki Māori Banking Team to support Māori as Auckland grows More>>

Pharmaceuticals: Commerce Commission To Consider Pharmaceuticals Merger

The Commerce Commission has received an application from Pfizer Inc. seeking clearance to acquire all of the shares in Hospira Inc. More>>

Real Estate: Housing Unaffordability Issues Spread

Surging house prices in Auckland and Queenstown last month pushed home ownership even further beyond the reach of first home buyers in the two districts, according to the AMP360 Home Loan Affordability Report for March. More>>

Statistics NZ: Annual Exports To China Dip Below Australia

The value of goods exports to Australia ($8.7 billion) surpassed those to China for the year ended March 2015, Statistics New Zealand said today. More>>

Science: Hookworm Discovery At Malaghan Institute

Professor Graham Le Gros has led a team which has stimulated both innate and memory responses to the parasite, discovering along the way the unexpected behaviour of one particular immune cell, in Hookworm, one of the world’s most devastating tropical ... More>>

Business: Provinces Urged To Make Full Use Of New Air Services

Provincial New Zealand has been urged to use new air services to Auckland or risk losing them either partially or completely. The stark warning was issued today by Far North mayor John Carter at a ceremony at Kaitaia airport to mark the final Air ... More>>

Mobile: 2degrees To Credit All Calls And SMS To Nepal

In the wake of the devastating earthquake in Nepal in the weekend, 2degrees will be crediting all calls and SMS messages made to mobiles and landlines in Nepal from Friday 24th April until midnight Wednesday 29th April. More>>

Scoop Business: Alex Swney Pleads Guilty To $2.5M Fraud Charge

Alex Swney, former chief executive of the Auckland city centre business association Heart of the City, has pleaded guilty to dishonestly using documents to obtain $2.5 million. More>>

ALSO:

Petrol Burns Prices: Second Consecutive Quarterly Fall For CPI

The consumers price index (CPI) fell 0.3 percent in the March 2015 quarter, following a 0.2 percent fall in the December 2014 quarter, Statistics New Zealand said today. The last time the CPI showed two consecutive quarterly falls was in the December 1998 and March 1999 quarters. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news