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

 

Royal Society: Review Finds Community Water Fluoridation Safe And Effective

A review of the scientific evidence for and against the efficacy and safety of fluoridation of public water supplies has found that the levels of fluoridation used in New Zealand create no health risks and provide protection against tooth decay. More>>

ALSO:

Scoop Business: Croxley Calls Time On NZ Production In Face Of Cheap Imports

Croxley Stationery, whose stationery brands include Olympic, Warwick and Collins, plans to cease manufacturing in New Zealand because it has struggled to compete with lower-cost imports in a market where the printed word is giving way to electronic communications. More>>

ALSO:

Prefu Roundup: Forecasts Revised, Surplus Intact

The National government heads into the election with its Budget surplus target broadly intact, delivering a set of economic and fiscal forecasts marginally revised from May to reflect weaker commodity prices and a lower tax take. More>>

ALSO:

Convention Centre: Major New SkyCity Hotel And Laneway For Auckland

Today SKYCITY Entertainment Group Limited revealed plans to build a new hotel and pedestrian laneway of bars, restaurants and boutique shopping on land it owns in the Nelson and Hobson Streets block, expanding the SKYCITY Entertainment Precinct. More>>

ALSO:

Igniting The Spark: Bringing The Digital Enabler To Life

Changing a name is, relatively speaking, the easy part of a re-invention. Changing a culture, getting all the ducks in a row, turning yourself inside-out to become customer-inspired is a much bigger challenge. More>>

ALSO:

Ebola And NZ: Targeted Screening At Airport But Risk Low

The risk of any cases of Ebola in New Zealand remains very low, but health and border authorities are well prepared... anyone arriving in New Zealand who in the last three weeks has visited countries affected will be screened for symptoms of the disease. More>>

ALSO:

Scoop Business: Brewer Seeking Crowd-Funding Cancels Shareholders’ Dividends

Shareholders in Renaissance Brewing company, the first business to seek equity through crowd-funding in New Zealand, have cancelled their claim on $147,000 of accumulated earnings “to make Renaissance a more attractive investment opportunity.” More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news