Australia Loans to Rise on $90 Billion of Energy Debt, CBA Says
Project finance and infrastructure debt will swell Australian syndicated-loan volumes as firms seek more than $90 billion of funding for energy projects, according to Commonwealth Bank of Australia. (CBA)
Six coal-seam gas and liquefied-natural-gas projects in three Australian states will require loans in the “short to mid-term,” the Sydney-based bank wrote in a report published today. Public-private partnerships will also seek to raise debt in 2012 to build hospitals and prisons, according to the report.
“The large LNG project pipeline in the natural resources sector in Queensland, Northern Territory and Western Australia will likely require bank debt finance, translating into elevated loan-market volumes,” according to the report. “Project finance and infrastructure transactions will drive new money deals in the loan market in 2012.”
The nation has eight LNG ventures under development, driven by increasing Asian demand for less-polluting alternatives to coal. Chevron Corp. (CVX), Royal Dutch Shell Plc (RDSA), Woodside Petroleum Ltd., Santos Ltd. (STO), ConocoPhillips (COP), BG Group Plc (BG/) and Inpex Corp. are building projects to supply countries including China.
Australia must spend more than A$770 billion ($823 billion) in the 10 years to 2018 on infrastructure to support its economy, PricewaterhouseCoopers LLP wrote in a report last year that cited Citigroup Inc. data.
Public-private partnerships expected to seek funding in 2012 include the Sunshine Coast Hospital, the Bendigo Hospital and Eastern Goldfields Prison, according to the Commonwealth Bank report.
Loan Volumes
Loan volumes in Australia and New Zealand surged 57 percent to $133.8 billion in 2011 from the previous year as firms sought early refinancing amid Europe’s debt crisis and as borrowers such as Wiggins Island Coal Export Terminal Pty arranged funding for resource infrastructure projects, according to data compiled by Bloomberg.
Australia is the world’s biggest shipper of iron ore and coal. Its mineral and energy exports reached a record A$48.8 billion in the third quarter, according to the Bureau of Resources and Energy Economics.
European banks have reduced lending in Australia due to the sovereign-debt crisis, while rising bank funding costs are spurring an increase in loan margins, Commonwealth Bank said.
With $180 billion of Australian loans maturing in the next three years, institutional investors may take a more active role in providing capital as the European banks retreat, according to the report.
The margin paid by BBB rated borrowers on three-year loans rose to 180 basis points more than the bank bill swap rate at the end of 2011, from 160 basis points three months earlier, Commonwealth Bank said in the report.
To contact the reporter on this story: Sarah McDonald in Sydney at smcdonald23@bloomberg.net.
To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net
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