TCorp has raised its borrowing requirements due to greater infrastructure investment by the New South Wales government but will keep its triple-A credit rating because of an offset fund called the NSW Generations Fund.

On Wednesday, TCorp, the investment and financial management partner of the New South Wales public sector, provided fresh details of its borrowing program, including on the growth of the $10 billion debt retirement fund.

The additional information came one day after the release of the New South Wales state budget on Tuesday which revealed a borrowing requirement of $13.3 billion for the 2019/20 financial year.

According to TCorp, this comprises $9.7 billion of new client loans and maturities of $3.6 billion.

This is a $1.4 billion increase on the estimate at the 2018/19 budget.

“The increase in borrowing is largely due to infrastructure investment by the state government, said Fiona Trigona, the manager’s head of funding and balance sheet.

Trigona said TCorp had extended its maturity profile during the year; it had issued new bonds and then bought back shorter-dated paper.

Looking ahead, she noted a difference in the manager’s funding strategy this year. “In previous years, we raised funds through tenders and a bit through bank syndication. In the new financial year, we will be more heavily reliant on syndication because obviously we have a larger funding program.”

Trigona pointed out that, for  the first time in many years, TCorp will be issuing bonds right across the curve whereas in prior years it issued very issued long-dated paper.

Speaking of the NSW Generations Fund she said it is forecast to jump to $28 billion over the next decade.

“When the time is right the assets in this fund can be drawn down to repay debt she said, noting that the assets in the fund are recognised as an offset to the state debt by the major ratings agencies.

TCorp plans to issue a green bond by the end of the calendar year to provide a mechanism for investors to contribute capital to projects with positive environmental outcomes and diversify its investor base.

Last year, the manager issued a $1.8 billion green bond, the largest by a single issuer in the Australian market .

The final amount and composition of funding will be subject to market conditions and the borrowing requirements of TCorp’s clients.

With $105 billion of funds under management, TCorp is a top 10 Australian investment manager and is the central borrowing authority of the state of NSW, with a balance sheet of $66 billion.

NSW Treasurer Dominic Perrottet on Tuesday delivered record infrastructure spending and a small budget surplus.

The budget revealed a cool $93 billion has been earmarked for infrastructure over the next four years.

The result was marred however by a slump in the housing market and slowing growth which dented the surplus for 2018-19 causing it to drop from $1.4 billion 12 months ago to just $802 million by the end of this financial year.

Elizabeth Fry has been a financial journalist for more than 25 years and has written for a number of publications, including CFO, The Financial Times and The Australian Financial Review.
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