Bank Bond issues up
(29 July 2008 – Australia) According to the RBA, Australian banks have significantly increased their corporate bond issues as a precautionary measure.
Australian banks have issued more than double the amount in the first half of calendar year 2008 compared with corresponding periods between 2005 and 2007.
A total of $67 billion was issued in the first half of 2008 compared with an average of $32 billion in previous years.
In an address to the Debt Markets 2008 Summit, Assistant Governor (Financial Markets), Guy Debelle, said that the issuance by the banks has been precautionary in case the dislocation in credit markets was to worsen.
Debelle added that the major banks are generally ahead on their funding plans. This indicated that the issuance by major banks has been more than enough to meet the banks’ asset growth and maturation of existing issues.
This has substituted for the dislocation in asset-backed and corporate bond markets, he concluded.
Specifically, Debelle said the move by banks to issue more debt was compensating for weakness in other areas of the non-government bond market, such as the residential mortgage-backed securities (RMBS) and the asset-backed commercial paper (ABCP) sectors.
Since the onset of the credit market strains in mid 2007, the volume of Australian residential mortgage-backed securities (RMBS) issuance has been very low.
The quarterly issuance has averaged $2 billion compared to average quarterly issuance of $18 billion over the previous year.
A total of $67 billion was issued in the first half of 2008 compared with an average of $32 billion in previous years.
In an address to the Debt Markets 2008 Summit, Assistant Governor (Financial Markets), Guy Debelle, said that the issuance by the banks has been precautionary in case the dislocation in credit markets was to worsen.
Debelle added that the major banks are generally ahead on their funding plans. This indicated that the issuance by major banks has been more than enough to meet the banks’ asset growth and maturation of existing issues.
This has substituted for the dislocation in asset-backed and corporate bond markets, he concluded.
Specifically, Debelle said the move by banks to issue more debt was compensating for weakness in other areas of the non-government bond market, such as the residential mortgage-backed securities (RMBS) and the asset-backed commercial paper (ABCP) sectors.
Since the onset of the credit market strains in mid 2007, the volume of Australian residential mortgage-backed securities (RMBS) issuance has been very low.
The quarterly issuance has averaged $2 billion compared to average quarterly issuance of $18 billion over the previous year.
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