Moody’s Classifies Australian Companies’ Debt as Attractive Risk
Moody's Investors Service classified on Monday the corporate debts of Australian companies as attractive risk. With the classification, the Aussie firms will not find it difficult to refinance their $23 billion debt over the next two years, Herald Sun reports.
Analysts explained the attractive risk classification to Australia being on target to reach higher gross domestic product growth compared to other western economies such as the U.S. and Britain.
Moody's said the $23 billion corporate debt, another $56 billion sovereign debt and $460 billion short-term debt will need to be refinanced, but expressed optimism that 95 per cent of the debts rated investment grade would find it easy to attract lenders.
"We expect corporate issuers to continue to exercise heightened caution and maintain many of the austerity measures put in place in 2009," Moody's was quoted by News.com.au.
"But we believe Australian corporate issuers are well positioned to ride out further global uncertainty. Therefore, we expect such issuers to prudently managed their capital to tap debt-ceiling markets on an expeditious basis for refinancing," the rating agency added.
The bulk of the corporate debts are held by Australian mining companies. BHP Billiton has $15.3 billion outstanding debt in June.
Retailer Westfield has $15 billion debt and telecom firm Telstra $14.2 billion.
Other Aussie firms with substantial debts are Qantas, Woodside, Wefarmers, Woolworths, Fortescue, Amcor and Brambles.
After Australia's share market dipped about 10 per cent in early August, investors demanded a higher premium for corporate bonds. As a result sovereign bonds have returned 5.5 per cent since June. It is 2.2 points higher than bonds sold by some of the largest Australian companies.