Corporates wrestle with credit question

The credit metrics of the Australian corporate sector are fundamentally sound. Today, their funding requirements are low. But when their capex plans pick up, will they look to access the domestic corporate bond market, which is still regarded as being very under-developed relative to the size of the economy and to the pool of domestic institutional and retail liquidity? Or will they choose, as many Australian corporates have in the past, either to fall back on the bank market, or to explore funding opportunities in the deep and liquid US dollar market? These were some of the questions raised in EuroWeek’s Australian Corporates Roundtable, which took place in Sydney in August. Participants were: