South Australian Government Financing Authority (SAFA) functions as the central financing authority for the state of South Australia (SA). SAFA is also the state’s captive insurer, fleet manager, and undertakes a range of commercial advisory and financing activities.  

SAFA plays an integral role in the management of the state’s finances and risks, harnessing economies of scale and relevant expertise to provide a range of treasury, insurance and commercial advisory services to public sector clients.

SAFA was established in 1983 under the Government Financing Authority Act 1982 (SAFA Act). It is a statutory authority constituted by the under treasurer of SA. It is subject to the control and direction of the treasurer of SA.

Since its establishment, SAFA’s functions have expanded to include a range of financing and commercial advisory activities on behalf of the state government. This includes being the government’s captive insurer since 2006.

Liabilities incurred or assumed by SAFA are guaranteed by the treasurer under the SAFA Act.

SAFA is exposed to financial and operational risks in its treasury, insurance and commercial activities. It has a robust risk-management and reporting framework encompassing the ‘three lines of defence’ model. Its corporate-governance arrangements include an independent advisory board.

SAFA funds the SA public financial and nonfinancial sectors via fixed- and floating-rate short- and medium-term borrowings. Its principal source of medium-term funding is the issuance of “select line” bonds. Short-term funding for liquidity management purposes is obtained through SAFA’s one-year AONIA-linked FRN issuance, CP and ECP programmes.

SAFA’s 2021/22 revised gross funding requirement is A$6.3 billion. This comprises new-money requirements for the SA public sector of A$2.8 billion, pre-funding of A$800 million, refinancing of future term maturities of A$1.8 billion and the rollover of short-term funding of A$2.5 billion. SAFA’s original 2021/22 budget gross funding requirement was A$7.7 billion.

SAFA’s funding strategy focuses on long-term domestic benchmark select line bonds, medium-term AONIA-linked FRNs and short-term funding via domestic CP and one-year AONIA-linked FRNs. SAFA may continue to tap offshore markets for ECP funding when conditions are favourable, with any issuance fully swapped into Australian dollars.

Following a comprehensive overhaul of its liquidity management, SAFA has continued with its strategy by issuing select line bonds maturing in even years and targeting outstanding volume up to A$3.5 billion per line. It has also continued to extend its curve to 2036 in benchmark format and will monitor opportunities for further lengthening in nonbenchmark format out to 30 years based on borrower requirements and investor demand.

SAFA does not intend to access offshore markets for EMTNs or to issue inflation indexed bonds. As at 21 January 2022, SAFA had A$25.8 billion of domestic fixed- and floating-rate select line bonds on issue and A$2.3 billion outstanding under its short-term debt programmes, including A$750 million in AONIA-linked FRNs.

Andrew Kennedy, Director, Treasury Services
+61 8 8429 0416
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www.safa.sa.gov.au