The Corporation manages the Northern Territory's exposure to funding risk by ensuring the Northern Territory Government is not exposed to a significant refinancing risk in any financial year.
The Corporation's approach to minimising funding risk involves the diversification of borrowing and investment activities across the maturity spectrum and utilising a variety of funding sources to meet the Corporation's requirements.
Private Placements and Public Issues
Private placements are used by the Corporation to satisfy specific funding needs. This is an alternative to the main semi-government bond market, which is made up of large issues of homogenous debt issued by the central financing authorities of each state.
Private placements are attractive because of the ease of issuance, which makes them suitable for small parcels of debt and their flexibility for tailoring to domestic market movements and investor demand.
In recent years, the Corporation has developed a major class of bond issues across a number of years with a minimum balance of $500 million on issue. These issues have been established to meet investor demand for greater liquidity and to promote market awareness.
The Corporation currently has seven institutional bond issues:
||Amount on issue|
|15 October 2013
|14 July 2014
|20 October 2015
|20 November 2016
|17 November 2017
|20 September 2018
The Corporation's short-term funding requirements are met through its promissory note facility. The notes are issued by way of tender, using ASX (Austraclear Services Limited) as the issuing, lodging, recording and paying agent.
Territory Bonds is the Corporation's retail fixed interest borrowing product and is used to attract funds from the general public. Territory Bonds have been issued since 1979 and are offered to investors seeking a safe, secure, government-guaranteed investment.
As at 30 June 2012, total outstanding Territory Bonds on issue was approximately $118 million.
Northern Territory Treasury Corporation borrows funds from the domestic and international financial markets by offering a range of financial products. The funds raised by the Corporation assist to finance the Northern Territory’s infrastructure requirements such as housing, transport, health and education services.
As at 30 June 2012, Northern Territory Treasury Corporation's total outstanding debt was A$3.747 billion of domestic debt. Total Borrowing in 2011-12 (pdf, 139kb) | Total Borrowing in 2011-12 (docx, 117kb) was A$1398 million.
The Corporation is rated Aa1 by Moody's Investor Services.
The Corporation's credit rating has a 'negative' rating outlook based on the ongoing support by the Commonwealth and Government policies designed to improve the Territory's fiscal and debt position.
All obligations incurred or assumed by the Northern Territory Treasury Corporation are guaranteed by the Treasurer on behalf of the Northern Territory under section 20 of the Northern Territory Treasury Corporation Act.
Interest Withholding Tax on Northern Territory Treasury Corporation Domestic Bonds
On 9 December 2008, amendments to s.128F of the Income Tax Assessment Act 1936 (ITAA 1936) came into effect to allow bonds issued in Australia by state and territory central borrowing authorities to be eligible for exemption from interest withholding tax (IWT).
The amendments apply to interest/coupon payments made on or after 9 December 2008, which means all domestic bonds, whether issued before or after that date, are eligible. The amendments do not necessarily exempt all bonds currently on issue, rather only those securities which otherwise meet the requirements of s.128F, specifically the public offer test.
In order to assist Australian custodians and paying agents holding bonds on behalf of offshore counterparties, Northern Territory Treasury Corporation (NTTCorp) wishes to make the following clarifications.
NTTCorp Domestic Bonds which qualify under s.128F.
NTTCorp considers the following select lines of stock satisfy the relevant requirements of s.128F and are therefore exempt from IWT:
||Austraclear Series ID
|15 Oct 2013
||15 Apr and 15 Oct
|14 Jul 2014
||14 Jan and 14 Jul
|15 Oct 2015
||15 Apr and 15 Oct
|20 Nov 2016
||20 May and 20 Nov
|17 Nov 2017
||17 May and 17 Nov
|20 Sep 2018
||20 Mar and 20 Sep
Other NTTCorp Domestic Bonds
NTTCorp has a number of smaller issues of domestic bonds outstanding which are not part of its domestic select lines of stock. NTTCorp cannot at this stage make any definitive statements regarding eligibility of these securities for the IWT exemption. Any domestic custodians holding such stock on behalf of offshore parties should contact NTTCorp on a case-by-case basis to clarify IWT status of these securities.