Friday 27th June 2008
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Marac kicked off its $125 million, five-year bond offer and has outlined that its rates for reinvestment and new money remain strong.
Managing director Brian Jolliffe says the purpose of the bond offer is to further diversify the business and to get some longer-term money on the books.
He says Marac has always aimed to diversify both its lending and funding base.
On the funding side the company has $480 million committed bank facilities along with a $300 million securitisation programme which is supported by Westpac.
Jolliffe says it has consolidated its bank programme which is now supported by all five of the major trading banks.
He says many people don't realise that "banks are the single biggest investor in Marac by a long way."
This is an opportunity to get some new investors on board and to get a completely new investor base.
Jolliffe says the bond offer will bring a whole new group of investors to the company. Also about getting some five-year liabilities on the balance sheet.
An issue with debentures is that the investors determine the term, which then impacts how the company can lend.
Jolliffe says Marac's reinvestment rates have held up during the down term and it has been getting an increasing amount of new investments at well.
Currently it has around $140 million in liquidity and this will swell once the bond offer is completed.
Reinvestment rates sit in the 65-75% range and new money flows remain strong. In fact, "May was our biggest new money month we have had since June last year."
"It's going on into June too," he says.
Jolliffe says Marac primarily finances plant and equipment to small and medium sized enterprises. Currently some sectors such as agriculture and infrastructure are strong with good lending opportunities while others like manufacturing and transport are weaker.
Marac does have some property lending. It has around $200 million in developments and another $100 million in tenanted commercial and industrial properties.
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