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Technology Stocks : PCW - Pacific Century CyberWorks Limited -- Ignore unavailable to you. Want to Upgrade?

To: ms.smartest.person who wrote (221)	2/4/2001 10:02:36 PM
From: ms.smartest.person	Read Replies (1) \| Respond to of 2248

Companies on borrowing binge By STEPHEN DABKOWSKI Saturday 3 February 2001 Australian-based companies finished last year with a borrowing binge, ignoring concerns of an economic slowdown. They chalked up $US11.33 billion ($A20.41 billion) in loans in the December quarter - more than any other country in the region. The New York-based Loan Pricing Corporation, which tracks the global bank lending market, said Australian incorporated companies borrowed more than $US26.1 billion ($A47 billion) last year. In the December quarter, corporate lending in Australia jumped ahead of activity in such larger economies as Japan and Hong Kong to top Asia-Pacific borrowing. Hong-Kong based analyst with Loan Pricing Corporation, Erica Mair, said the jump went against the regional trend. Lending had fallen in other countries as they responded to signs of a global economic slowdown. "A lot of the lending in Australiasia in the quarter was telecom-related deals, which just shows how strongly the sector is growing ... and that they require quite a lot of working capital payments," she said. "The telcoms were involved in quite a lot of debt repayment, which is refining old deals, and they were involved in a lot of acquisition activity as well." A detailed breakdown of syndicated lending in the December quarter shows blue-chip companies such as Telstra and BHP, as well as Texas Utilities Australia, Cable & Wireless Optus and One.Tel led the borrowing. Bermuda Finance No1 Pty Ltd, the joint venture company between Telstra and Pacific Century CyberWorks, borrowed $US1.5 billion ($A2.7 billion) through Barclays and J.P. Morgan as part of their corporate tie-up. Telstra itself, according to Loan Pricing Corporation, borrowed another $US1.3 billion through a consortium of lenders including Barclays, Danske bank, J.P Morgan and Westpac for more working capital. The biggest syndicated borrowing in the quarter was $US2 billion by Billiton Finance (Australia), part of the giant mining group Billiton, to help finance a recent takeover. The Loan Pricing Corporation points out that the jump was partly due to the lumpy nature of the finance industry, where several deals being negotiated over months can be concluded at the same time. It also points out that the data represents the total stock of lending, and not necessarily new debt, as it includes the refinancing of debt to repay other debt. As well, Loan Pricing Corporation's criterion for Australian lending is that the borrowing companies are incorporated in Australia. So they include subsidiaries of overseas-based corporations. But the size of overall corporate lending at the end of 2000 has surprised analysts. The Australian Bankers Association would not comment. National Institute of Economic Research head Peter Brain said the level of corporate sector borrowing showed the sector "isn't as strong as people think it is". He said the scale of borrowing reflected the difficulty that many companies faced as their revenues were hit by inability to pass on the full impact of the GST and other costs. "The company sector isn't that crash hot, so when you get the margins being squeezed, which all the evidence points to at the moment, you've got to borrow to stay in business and I think that's what's happening," Dr Brain said. "I think it's a simple as that." This story was found at: theage.com.au