Raising capital in a changing

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Raising capital in a changing global
environment Michael Ullmer Group Executive,
Institutional and Business Services Commonwealth
Bank of Australia 20 March 2003
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Disclaimer

• The material that follows is a presentation of
  general background information about the Banks
  activities current at the date of the
  presentation, 20 March 2003. It is information
  given in summary form and does not purport to be
  complete. It is not intended to be relied upon as
  advice to investors or potential investors and
  does not take into account the investment
  objectives, financial situation or needs of any
  particular investor. These should be considered,
  with or without professional advice when deciding
  if an investment is appropriate.

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Speakers Notes

• Speakers notes for this presentation are
  attached below each slide.
• To access them, you may need to save the slides
  in PowerPoint and view/print in notes view.

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Growth of the domestic corporate bond market

Total non government Australian debt issuance by
year 1998 to 2003
Source Commonwealth Bank
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Australian corporate bond issuance by sector

Australian non government bond issuance in 2002
by sector Total A37.5bn
Source Commonwealth Bank
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Major developments in the Australian bond market

• Special Purpose Vehicles
• Public Private Partnerships
• Growing retail demand for hybrid products
• Commercial Mortgage Backed Securities CMBS
• US Traditional Private Placements

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CMBS - an emerging asset class
Source Commonwealth Bank
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US Traditional Private Placements

• Lower rated and unrated Australian and New
  Zealand borrowers can now raise longer term
  capital via the US private placement market.
• Capital not available domestically is now
  available in large volumes for 10 to 15 year
  maturities.
• This further restricts supply from Australian
  investors.
• Domestic banks are forming alliances with US
  investment banks to achieve this - CBA and
  Merrill Lynch is an example.
• More than US2.5bn has been raised since the
  start of 2002 and there is a substantial pipeline
  for new deals.
• Issuers include Amcor, Boral, PBL, Santos, CSL,
  Caltex Australia and Origin Energy, Network Ten
  and Contact Energy (NZ).

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Australian borrowers benefit in global shift from
equities to bonds
US mutual fund flows shift from equities to
government and corporate bonds
Ten week average US equity and corporate bond
mutual fund flows
Ten week average US equity and government bond
mutual fund flows
b
b
inflows
Source MFMF, Commonwealth Bank
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Increasing demand for Australian credit is
creating offshore borrowing opportunities

Am
Source Bloomberg
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Commonwealth Bank achieving volume and cost
benefits by accessing offshore demand
CBA Wholesale Funding as at 31 December 2002
Total A48.9bn
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Commonwealth Bank accessing offshore markets
issuing highlights

• USD500m 5yr FRN issued June 2002 25 placement
  into China
• 4 Japanese Uridashi issues for almost A2
  billion
• Structured EMTN issues 420 completed
• Global Securitisation Medallion issues
  A11billion raised

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