Gov guarantee still vital
(16 September 2009 – Australia) The Federal Government guarantee on bank debt is vital, according to CBA’s treasurer, despite increased take up of non-guaranteed bonds.
CBA Treasurer, Lyn Cobley, told Dow Jones Newswires in an interview that while foreign investors are increasingly warming to non-guaranteed debt, the federal guarantee still plays a vital role.
The Australian banks have collectively been the fourth largest borrowers of government guaranteed debt since guarantees were introduced last year. Only banks in the US, UK and France have borrowed more than the $120 billion borrowed by Australian banks.
Ms Cobley added that until such time as the bank gets more investors in the non-guaranteed format, so long as there are other countries using the guarantee, then it is something which is very valuable to CBA.
While domestic investors are generally comfortable with non-guaranteed bonds, there is also a growing acceptance of the non-guaranteed product offshore, Cobley added.
But the banks are still offering guaranteed bonds; earlier this month Commonwealth Bank sold US$2.75 billion (A$3.2 billion) of September 2014 guaranteed bonds, days after Westpac sold US$3.5bn in guaranteed bonds.
CBA have so far issued around A$14 billion of A$38 billion that is required for the year, one third of which is non-guaranteed.
While Cobley noted that CBA is looking to move away from guaranteed debt, she emphasised its importance with the securitisation market effectively still closed. It's not opened up to the extent that CBA would do anything about it, Cobley said.
The Australian banks have collectively been the fourth largest borrowers of government guaranteed debt since guarantees were introduced last year. Only banks in the US, UK and France have borrowed more than the $120 billion borrowed by Australian banks.
Ms Cobley added that until such time as the bank gets more investors in the non-guaranteed format, so long as there are other countries using the guarantee, then it is something which is very valuable to CBA.
While domestic investors are generally comfortable with non-guaranteed bonds, there is also a growing acceptance of the non-guaranteed product offshore, Cobley added.
But the banks are still offering guaranteed bonds; earlier this month Commonwealth Bank sold US$2.75 billion (A$3.2 billion) of September 2014 guaranteed bonds, days after Westpac sold US$3.5bn in guaranteed bonds.
CBA have so far issued around A$14 billion of A$38 billion that is required for the year, one third of which is non-guaranteed.
While Cobley noted that CBA is looking to move away from guaranteed debt, she emphasised its importance with the securitisation market effectively still closed. It's not opened up to the extent that CBA would do anything about it, Cobley said.
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