Debt capital market proceeds for Australia increased more than 16 per cent in 2024 as corporates became more confident that inflation was being reined in.
According to figures from LSEG, there was $US193.6bn in proceeds from 340 issues across total DCM activity. Of that, 203 issues, adding up to $US102bn, were from Australian corporate clients.
Goldman Sachs head of debt capital markets for Australia and New Zealand, Jared Baker, said it was a robust year for debt issuance, both in terms of Australian corporations and financial institutions going to offshore markets.
He said there was a big focus on companies looking to refinance debt on better terms over a long period, while debt sourced for mergers and acquisitions activity continued to feature.
Mr Baker said that during the pandemic companies were unable to go overseas and refinance, which was why it became a major focus in 2024.
“Aussie corporates want to extend and get the best possible refinancing,” he said.
“They have had the real pick of the bunch this year.
“If you think about the big corporate issuers, they can go to US markets, Euro markets … we have even been really active in the Australian domestic bond market.”
Both Woolworths and Origin tapped the Australian debt market this year, he said.
“That has been a real surprise for a lot of issuers in terms of how strongly that market has performed.”
The top four Australian banks led 2024 with the largest issues, while Woodside and the NSW Treasury embarked on some of the largest debt issues.
Markets were very focused on interest rate cuts, particularly in the US, because it was a source of uncertainty for the outlook for 2025.
“The market has been looking at where do interest rates settle,” Mr Baker said.
“That has been one of the biggest questions for 2024, in terms of where the central banks are coming out.”
Mr Baker said next year appeared to be positive, based on economic indicators, with Goldman Sachs particularly bullish on the outlook.
“The question mark is how the Fed reacts and whether they can land the plane or not, and we think they can.
“They have done a good job, and that paints the picture and positive backdrop for 2025.”
Industrial companies securing debt was another theme, with Orica’s $1bn purchase of Cyanco Intermediate in February an example. It was paid for with bridging finance and equity.
“The markets are very supportive of highly accretive mergers and acquisitions in terms of the capacity to finance,” Mr Baker said.
He said boards had regained confidence about the outlook for their businesses, leading to more capital spending for organic growth and more mergers and acquisitions.
“That is all going to require financing,” he said.
“They can feel confident they can bring those deals to market, finance them efficiently and shareholders should receive those stories quite well.”
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