ColonialFirstState (CFS) is expecting strong interest from institutional investors such as superannuation funds following its establishment of a US$1 billion Euro Commercial Paper Program for its Wholesale Geared Share Fund.
CFS is promoting the Wholesale Geared Share Fund as the largest internally-geared managed fund in Australia, and it is claiming that the Commercial Paper Program will reduce the borrowing costs for the fund and help meet “escalating demand from investors for geared products, particularly from superannuation funds which cannot borrow in their own right”.
Colonial will borrow on behalf of the fund and swap the proceeds into fully hedged Australian dollars to assist in reducing costs and further diversifying funding sources.
CFS chief executive Brian Bissaker said through the Euro Commercial Paper Program the Geared Share Fund would be able to borrow outside Australia for the first time.
“CFS is the only fund manager in Australia which uses capital markets directly to finance our geared share funds,” he said. “This unique capability gives us the opportunity to further reduce funding costs, which gives us a competitive advantage.”
