Cautious Optimism For NZX Top 50 With Tough Terrain Ahead

Chapman Tripp’s latest NZX Top 50 Funding Composition Trends & Insights publication reports that CFOs of New Zealand’s largest companies have a shared optimism for their ability to raise funds, in what looks to be a challenging year ahead.

Chapman Tripp’s annual analysis of the New Zealand Main Board (NZX) Top 50, tracks trends in funding arrangements. In the firm’s latest publication, comparisons have also been made with the Top 50 entities listed on the Australian Main Board (ASX Top 50).

Chapman Tripp partner Cathryn Barber said the NZX Top 50 are going into the post-Omicron phases of the COVID-19 pandemic with significant proportions of their bank facility commitments available for drawing.

The report also highlights that ASX Top 50 entities are more diversified in their debt financing arrangements than their New Zealand counterparts.

“The ASX Top 50 have a spectrum of debt products available to them – which cannot be said for the NZX Top 50, as the second 25 rely heavily on bank debt as their primary source of funds,” Barber said.

Other findings include:

· Investor appetite for corporate-issued New Zealand retail bonds remained steady.

· Green and sustainability-linked financing continued its upward trajectory in New Zealand.

“A significant number of entities also reported a rise in interest and financing costs, a reflection of the incremental OCR hikes which have occurred over the 12 month period,” Barber concludes.

The firm’s recent CFO Survey also provided insight into the opinions and intentions of those who run New Zealand’s largest listed entities. CFOs in the NZX Top 50 sample group shared insights across various topics, including confidence in their entity’s current funding composition, plans for any changes in the coming year, and the strength of their relationships with lenders.

The firm’s analysis draws from a review of funding sources as reported in the NZX Top 50 and ASX Top 50 annual reports at 31 December 2021. For the purposes of preparing both the New Zealand and Australian data sets, banks, overseas companies and listed funds were excluded.

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