Borrowing for 2019/20

In our role as the State’s central borrowing authority, WATC is responsible for raising funds on behalf of the Western Australian public sector.

Estimated Borrowing Program for 2019/20

Continuing improvements in Western Australia’s fiscal position, due to stronger commodity prices, GST flows and ongoing expenditure control, resulted in the new money requirement for 2018/19 (as forecast in the 2018/19 Budget) falling from $2.7 billion to a small net reduction of approximately $0.5 billion.

The new money program for 2019/20, currently estimated at $1.1 billion, may also reduce, reflecting a continuation of improved revenues and subdued expenditure growth. Additionally, the funding requirement for 2019/20 may also be impacted by the proceeds generated from any assets sales or commercialisations.

The sourcing of WATC’s funding is subject to conditions in the various markets and the market mix during the year may be amended as necessary to meet WATC’s pricing, liquidity, lending and capital usage targets.

Term Funding Requirement	$b	$b
New Money Program (est.)		1.1
Projected Maturities
Bonds	3.5
FRNs	2.9
Less Prefunded FRN maturity	-0.3
+/- Changes to HQLA portfolio	0.2	6.3
Total Term Funding Requirement		7.4

Borrowing Strategy for 2019/20

In order to meet the State’s funding and debt management requirements for 2019/20, WATC plans to:

explore opportunities to issue a new bond line with a maturity in the 10-15 year sector

issue a new 4-5 year maturity floating rate note and continue to issue floating rate notes into outstanding lines in response to investor demand and to accommodate the term floating rate borrowing requirements of clients.

In addition, WATC will continue to:
Railcars. Courtesy of Public Transport Authority

issue across the yield curve to fund lending to clients

enhance the liquidity in existing lines of benchmark bonds by:

maintaining sufficient volumes on issue to retain benchmark bond status
support these securities in the market
issue through our Fixed Interest Market Making Panel, by tender, private placement or syndication

maintain approximately $2.5 billion to $3.5 billion of short-term paper on issue through domestic Short-Term Inscribed Stock and the offshore Euro Commercial Paper program to meet short-term lending and liquidity funding requirements

ensure that debt issuance undertaken through domestic and offshore borrowing programs is issued in a manner satisfying the requirements for exemption from interest withholding tax under Section 128F of the Income Tax Assessment Act 1936.

Budget for 2019/20

Based on the borrowing program, debt outstanding and investments, WATC is forecasting the following 2019/20 internal budget.

	$m
Income
Interest on Investments	61.5
Interest from Authorities	1,654.4
Fee Income	1.7
	1,717.6

Expenses
Interest on Borrowings	1,661.5
Depreciation/Amortisation	1.1
Borrowing Related Expenses	4.2
Administration Expenses	19.3
	1,686.1

Profit before Income Tax Equivalent	31.5
Income Tax Equivalent Expense	9.5
Profit for the Period	22.0

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Annual Report 2019

Borrowing for 2019/20

In our role as the State’s central borrowing authority, WATC is responsible for raising funds on behalf of the Western Australian public sector.

Estimated Borrowing Program for 2019/20

Borrowing Strategy for 2019/20

Budget for 2019/20

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