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* Govt to allow retail investors to access same bonds asprofessionals
* Potential to see retail bond issues double
* Telco, health firms, retail companies highly soughtborrowers
By Cecile Lefort
SYDNEY, March 20 (Reuters) - Australia's government isproposing to simplify the sale of retail bonds in a move thatcould offer firms an alternative to bank funding and see a largeincrease in issuance.
Among the new measures proposed by the Labor government onWednesday, the most important one is to allow individual buyersto access nearly all the same securities as professional buyersthrough a listing on the stock exchange.
"That is absolutely fabulous... it has the potential to be agame changer," said Phil Bayley, an academic and debt capitalmarket consultant at ADCM.
Unlike New Zealand, Switzerland or Japan, retail bond offersare rare in Australia where bonds are typically bought byprofessional investors.
However, since the global financial crisis hit, theAustralian government has been promoting the nascent retail bondmarket as an alternative source of funding for companies.
Efforts have been slowly paying off, with 2013 shaping up asa bumper year. East & Partners estimates as much as A$17 billion($17.6 billion) could be raised by December.
The bond listing initiative could see retail issuance soarto at least A$35 billion per year in the near-term, says ADCM'sBayley.
Possible borrowers could include telecom companies Telstra Optus, Vodafone as well as retailerJB Hi-Fi and health insurance firms Medibank and NIB,all of which would be highly sought names, according to bankers.
Out of the A$350 billion ($363.8 billion) or so of bondsoutstanding in Australia by non-government entities, less than 5percent are in the hands of individual investors. That's apittance, according to Barry Ziegler, head of retail fixedincome at Bell Potter Securities.
"We are so far behind," he said, pointing to New Zealand'sflourishing retail bond market.
A major impediment for borrowers in Australia has been therequirement for a costly and time-consuming bond prospectus.
Even as the governmen proposes to simplify this process,Ziegler would prefer it go farther and require just a term sheetas is done with professional investors.
Fuelling demand for retail bonds in Australia is a massiverise in the number of individuals managing their ownsuperannuation funds -- the national mandatory pension scheme.
They now account for A$418 billion of the A$1.4 trillionsuperannuation industry, an increase of more than 30 percent injust five years, government statistics showed.
