Australasian corporate borrowers are displaying increasing pessimism about the coming 12 months, with only 38 per cent expecting a high availability of liquidity in 2016, says BNP Paribas.
The annual Corporate Borrowers Intentions outlook, undertaken by BNP Paribas and Moody’s Investor Services, found that 38 per cent of borrowers rate the availability of liquidity as 'highly conducive' going into 2016, down from 90 per cent heading into 2015.
The report also found that 9 per cent of chief financial officers and corporate treasury managers expect credit spreads to be 'highly conducive' in 2016, with 23 per cent also indicating that credit spreads are likely to be “challenging” or “very challenging”.
In terms of growing capital markets, the report said 52 per cent of respondents expect to increase their use of capital markets 2016.
BNP Paribas head of debt capital markets Kate Stewart said: “Firms are maintaining conservative debt targets and continue to focus on diversifying and lengthening the tenor of their funding.
“More than half the survey respondents say their company issues debt securities on an annual basis, while nearly 90 per cent say they issue at least once every 2-3 years,” Ms Stewart said.
Moody’s Investors Service associate managing director of corporate finance, Patrick Winsbury, noted that Australasian issuers are becoming increasingly interested in green bonds.
“With the increased community focus on environmental issues, we expect green bond issuance to increase and diversify; especially as governments around the globe seek to develop cleaner urban infrastructure and energy production and as more institutional investors seek to demonstrate that they are responsible investors,” Mr Winsbury said.
However, he pointed out that while there is a growing interest in green bonds, only two per cent of respondents are exploring issuing such bonds.
“A third said they were not interested in this source of funding – despite them appealing to a wider range of investors and generally being priced in line with generic bond curves,” he said.
The report also found that issuers expect fewer markets will offer optimal funding conditions in 2016, likely limited to Australia, the US and Europe.