Corporate Treasurer Of An Australian Based Property Development, Management And Investment Company

2214 Words Mar 15th, 2015 9 Pages
Question 1 (Approximately 400 words)
You are the Corporate Treasurer of an Australian based property development, management and investment company. The organization you work for has undertaken its financing needs via unsecured bilateral and syndicated bank funding loans and via the CMBS securitization markets. The company has just experienced a downgrade in its senior unsecured credit ratings from A stable to A‐ negative outlook due to a reduction in earnings from record low levels of new property development and constrained earnings. The business is relatively unknown outside of Australian and has not borrowed in offshore capital markets before. A decision needs to be made on refinancing options for an A$250m loan due for maturity in 6 months time in which the primary lender bank wants to cut its exposure by 50% and cap its new lending to 3 years term to maturity.

a) What alternatives would you suggest recommending to the Board?

Current capital market:
The Australian domestic debt market has performed strong in recent months. There was a 55% increase in syndicated loan volume in Q4’14 compared to Q3’14 with US$34.8bn raised across 54 transactions . The CMBS market also performed well over the previous year with total issuances of AU$27bn in 2014 , however this is still below pre GFC levels. CBA recently priced $2bn in RMBS and the markets saw the return of Volkswagen Financial and services and Suncorp –Metway . Kangnews has suggested this level of activity could test…
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