Corporate Australia has raised a record amount of equity this year as businesses looked to alternative sources of funds in response to the global financial crisis, a senior Reserve Bank of Australia official (RBA) says.

The RBA’s head of domestic markets department John Broadbent says leverage in the corporate sector has been declining, with intermediated debt being replaced by a big increase in equity raisings.

“Listed corporates have raised a record amount of equity this year, totalling some $60 billion, with issues broadly based across all sectors,” Mr Broadbent said on Tuesday.

“This compares with an annual average of around $20 billion in the three years prior to the financial crisis.”

Mr Broadbent said most of these equity raisings had been used to pay down debt, with some companies explicitly saying the funds raised were to repay bank loans.
Full Story