Kiwi ports maintain steady funding
Auckland believes that local body ownership helps secure bank support. Credit: QFSE Media
New Zealand’s two largest ports - Ports of Auckland (POAL) and the Port of Tauranga - are reporting steady relationships with their banking creditors, albeit with some differences since the global financial crisis.
POAL chief financial officer Wayne Thompson believes that in New Zealand, local body ownership helps secure bank support.
Both ports advise a preference for purchasing as opposed to leasing major equipment, as well as a willingness from their financiers to lend to the “corporate” as a whole as opposed to on specific projects.
Continues Mr Thompson: “Currently banks are willing to lend on both, perhaps liking the idea of taking security on a specific asset (project). You can get project finance, but it can be more expensive.”
Due to its 21% bank debt/total assets ratio, Tauranga has the capacity to finance major capex investments through its current bank facility and annual cash flows, and turns to cash flow for other equipment purchases, explains Mr Gray.
“Also as we are Standard & Poors-rated we have good access to other sources of funds should they be needed – i.e. commercial papers, bond issues etc.”
Mr Thompson says POAL’s purchases are financed via a NZ$300m (US$249m) borrowing facility it has arranged with a syndicate of the ASB, BNZ and Westpac banks.
“We tend to operate syndicated as opposed to bilaterally as basically you have just the ‘one’ and that whole NZ$300 million is locked in. If it was not like that I would have documentation with each bank separately, but you might have a mix of pricings than coming down to one average.”
In terms of new and innovative financing options appearing in the marketplace, Mr Gray notes Tauranga is “regularly” approached by banks wanting to buy and lease back buildings as well as equipment.
Mr Thompson says “more exotic” funding options could include going into the US market and looking for ten-year funding, or bonds in the New Zealand retail market, but adds: “Each time we’ve looked at it, the cost has been higher and we haven’t seen the risk associated with our current level where we would want to diversify away from it at a higher cost.”
Images for this article - click to enlarge
Unless otherwise stated, all images copyright © Mercator Media 2012. This does not exclude the owner's assertion of copyright over the material.
