Borrowing and Financing Strategies
NTTC manages the Territory's exposure to funding risk by ensuring the Territory Government is not exposed to a significant refinancing risk in any financial year.
NTTC's approach to minimising funding risk involves the diversification of borrowing and investment activities across the maturity spectrum and utilising a variety of funding sources to meet NTTC's requirements.
Wholesale Public Issues
The primary source of funding for NTTC is Australian dollar denominated bonds issued in the wholesale market via syndication. In executing its borrowing program, NTTC’s strategy is to issue larger benchmark bond lines with a minimum balance of $500 million to meet investor demand for greater liquidity and to promote market awareness.
Through 2017-18, NTTC has largely focused on extending the duration of the bond curve, issuing bond lines with 10, 15 and 25 year maturity terms. The April 2033 and November 2042 series were issued in response to reverse inquiries. The intention is to tap these series over time to build them up to a minimum balance of $500 million.
NTTC currently has nine benchmark bond issues:
|Maturity Date||Coupon||Amount on issue|
|20 September 2018||4.75%||A$479.4 million|
|20 September 2021||4.25%||A$650 million|
|21 November 2022||2.50%||A$500 million|
|15 March 2024||6.00%||A$650 million|
|21 October 2024||2.75%||A$500 million|
|15 March 2026||6.00%||A$650 million|
|21 April 2028||3.50%||A$750 million|
|21 April 2033||3.75%||A$205 million|
|21 November 2042||4.10%||A$285 million|
In addition to issuing benchmark bonds, private placements are used by NTTC to satisfy specific funding needs. Private placements are attractive because of the ease of issuance, which makes them suitable for small parcels of debt and their flexibility for tailoring to domestic market movements and investor demand.
NTTC's short-term funding requirements are met through its promissory note facility. The notes are issued by way of tender, using ASX (Austraclear Services Limited) as the issuing, lodging, recording and paying agent.
Territory Bonds is NTTC's retail fixed interest borrowing product and is used to attract funds from the general public. Territory Bonds have been issued since 1979 and are offered to investors seeking a safe, secure, government-guaranteed investment.
As at 30 June 2017, total outstanding Territory Bonds on issue was approximately $86 million.
NTTC borrows funds from the domestic and international financial markets by offering a range of financial products. The funds raised by NTTC assist to finance the Territory’s infrastructure requirements such as housing, transport, health and education services.
As at 30 June 2017, NTTC's total outstanding debt was about A$3.75 billion of domestic debt. Total Borrowing in 2016-17 was A$527 million.
NTTC is rated Aa2 by Moody’s Investors Services with a negative outlook.
All obligations incurred or assumed by NTTC are guaranteed by the Treasurer on behalf of the Territory under section 20 of the Northern Territory Treasury Corporation Act.
Interest Withholding Tax on NTTC Domestic Bonds
On 9 December 2008, amendments to s.128F of the Income Tax Assessment Act 1936 (ITAA 1936) came into effect to allow bonds issued in Australia by state and territory central borrowing authorities to be eligible for exemption from interest withholding tax (IWT).
The amendments apply to interest/coupon payments made on or after 9 December 2008, which means all domestic bonds, whether issued before or after that date, are eligible. The amendments do not necessarily exempt all bonds currently on issue, rather only those securities that otherwise meet the requirements of s.128F, specifically the public offer test.
In order to assist Australian custodians and paying agents holding bonds on behalf of offshore counterparties, NTTC wishes to make the following clarifications.
NTTC Domestic Bonds which qualify under s.128F
NTTC considers the following select lines of stock satisfy the relevant requirements of s.128F and are therefore exempt from IWT:
|Maturity Date||Coupon||Coupon Dates||Austraclear |
|20 September 2018||4.75%||20 March and 20 September||NT2768||AU3SG0000383|
|20 September 2021||4.25%||20 March and 20 September||NT2769||AU3SG0001183|
|21 November 2022||2.50%||21 May and 21 November||NT2771||AU3SG0001712|
|15 March 2024||6.00%||15 September and 15 March||NT2743||AU000NT27436|
|21 October 2024||2.75%||21 April and 21 October||NT2770||AU3SG0001597|
|15 March 2026||6.00%||15 September and 15 March||NT2741||AU000NT27410|
|21 April 2028||3.50%||21 October and 21 April||NT2772||AU3SG0001738|
|21 April 2033||3.75%||21 October and 21 April||NT2774||AU3SG0001795|
|21 November 2042||4.10%||21 May and 21 November||NT2773||AU3SG0001746|
Other NTTC Domestic Bonds
Last updated: 19 July 2018