NBN Co whittles govt loan down to $13.9bn

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NBN Co whittles govt loan down to $13.9bn

Budget 2021: Makes a second repayment.

NBN Co has paid off an additional $2.6 billion of its government loan, leaving a balance of $13.9 billion to be refinanced by mid-2024.

The company paid off its first $3 billion at the end of last year, and budget documents [pdf] show that it made a further payment this month.

“The Australian Government has provided a loan of $19.5 billion to NBN Co, on commercial terms, which was fully drawn in July 2020,” budget documents state.

“The loan was established in December 2016 and must be repaid in full by 30 June 2024. 

“$3 billion was repaid in December 2020 and a further $2.6 billion was repaid in May 2021, with an outstanding balance of $13.9 billion expected as at 30 June 2021.”

The second repayment amount would mean that most of the money NBN Co sourced from US bond markets at the end of last month was put towards the government loan.

NBN Co’s ability to refinance the government loan as it has done so far was only made possible courtesy of a change to the loan agreement last year that “allowed NBN Co to access private debt markets to finance the repayments,” the budget documents note.

The government doesn’t show in its financial statements the cadence for futher repayments, instead listing the outstanding amount to be repaid in full in the 2023-24 financial year.

It appears this is to enable NBN Co flexibility to source the remainder of the money, meaning at least some of the balance is likely to be paid off sooner.

“As the loan agreement between the government and NBN Co allows some flexibility in relation to the timing of the repayment, the remaining amount is included in 2023-24,” it said.

The budget documents also update liabilities that NBN Co has incurred, and that the government has guaranteed, to Optus and Telstra.

The Optus guarantee, which expires this year, has less than $200m in generated liabilities, and the government said “there is a low risk that a claim would be made under the guarantee”.

The Telstra guarantee covers liabilities of $10.7 billion, the documents state.

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