This product allows clients to borrow for terms as short as one day to a maximum of one year. Interest is calculated on a simple interest basis and is payable with the principal on maturity. The interest rate applicable to liquidity borrowings is determined at the outset of the loan.
Term Floating Rate (TFR) Lending
This is a longer-term borrowing product with variable interest rate and interest payments. The interest rate is reset at regular periods over the term to maturity and is set at a margin to the Bank Bill Swap Reference Rate (BBSW). The BBSW rate used depends on the period the rate is to be fixed (e.g. generally quarterly or semi-annually). The principal can be structured to be repaid on maturity or on a fixed repayment schedule over the life of the loan.
Term Fixed Rate Lending
This borrowing product has a fixed interest rate for terms from six months to ten years (or longer by prior agreement). Product options include:
- Fixed rate bonds– interest only loans, where the borrower makes a series of regular fixed interest payments over the term of the loan, with the full amount of the principal to be repaid on maturity.
- Amortising loans– loans with equal fixed payments of principal and interest over the term of the loan, with the full amount of the principal repaid by maturity.
- Structured loans– loans with tailored fixed capital repayment schedules structured to suit individual requirements.
- Zero coupon loans– loans for terms greater than one year where all interest and principal is payable on maturity.
Working Capital Facility
The Working Capital Facility (WCF) provides clients with a low-cost source of liquidity to help optimise short-term cash flow management.
This product combines a low-cost overdraft facility with an interest-earning cash management facility that enables clients to manage timing mismatches and the uncertainty of receipts and payments. WCF eliminates the need for maintaining cash buffers in low interest earning bank accounts or paying for costly overdraft facilities. It can also be utilised to increase the yield obtained on short-term investments as well as optimising the timing of long-term debt drawdowns.
This product is available to our State Government clients and is issued through a Letter of Offer that specifies borrowing limits and binds the product’s usage to the terms and conditions in the WCF Product Disclosure Statement.
Interest Rate Swap Facility
An Interest Rate Swap (IRS) facilitates the exchange of a future stream of floating rate interest payments (normally benchmarked to the Bank Bill Swap Rate or BBSW) for a stream of fixed interest payments, or vice versa, based on a specified principal (face value) amount.
Our IRS Facility enables clients with debt facilities to modify the interest rate exposure of their debt portfolio without having to terminate or reissue physical loans. This decouples debt maturity profile management and interest rate exposure, resulting in significantly enhanced flexibility in debt maturity diversification and interest rate risk management.
Top - The Swan Bell Tower in Elizabeth Quay, Perth. Image courtesy of Tourism Australia.
Below - A ferry in Elizabeth Quay, Perth. Image courtesy of Tourism Australia.