News
The following interview is with a funding executive at an Australian government-sector issuer. It was conducted on 19 March 2020.
On 23 March, KangaNews hosted a live dial-in featuring some of the leading market economists covering Australia. It was the same illustrious panel that was to be a highlight of the KangaNews Debt Capital Markets Summit – which had been scheduled for the same day. In a rapidly changing world, the economists provided insight into a unique and vast, but practically unquantifiable, risk.
The Reserve Bank of New Zealand added its voice to the global chorus of central banks implementing unconventional monetary policy measures with the launch of a large-scale asset purchase programme on 23 March. This is designed to reverse tighter funding conditions from the COVID-19 crisis.
The Australian Office of Financial Management released further details on March 20 about its A$15 billion (US$8.8 billion) fund to support authorised deposit-taking institutions (ADI) and nonbank lenders via purchases of asset-backed securities. The AOFM revealed it would “provide support primarily (but not exclusively) within the non-ADI market”.
In an extraordinary week for financial markets with multiple central bank interventions in response to the COVID-19 crisis, Australasian deal activity was muted. Bank of Queensland refinanced a residential mortgage-backed securities transaction and two supranational, sovereign and agency borrowers tapped the Kangaroo market.
On 20 March, the Australian Office of Financial Management (AOFM) revealed as part of its weekly announcement of forthcoming transactions that it will cease short-dated treasury bond buy-backs via tender effective immediately. It scheduled no Treasury bond or inflation-linked bond tenders for the week beginning 23 March, having advised a week earlier that “weekly issuance operations for the foreseeable future will take specific account of prevailing market conditions”.
The Reserve Bank of New Zealand (RBNZ) has introduced a range of new measures to ensure the smooth functioning of financial markets. The measures, announced on 20 March, are aimed at keeping short-term interest rates low amidst the COVID-19 crisis.
The A$15 billion (US$8.5 billion) made available to the Australian Office of Financial Management (AOFM) to support bank and nonbank lenders via purchases of asset-backed securities could be enough to account for the bulk of the public securitisation market for the balance of 2020.
The Reserve Bank of Australia (RBA) took unprecedented action on 19 March to provide a “bridge” to an expected economic recovery after the COVID-19 crisis. RBA governor Philip Lowe expects the support package to be required for the foreseeable future but says he can see better times on the horizon.
The Australian Prudential Regulation Authority (APRA) is temporarily relaxing expectations on bank capital ratios to ensure banks can continue to provide credit while dealing with funding problems caused by COVID-19, the regulator revealed on 19 March. The announcement followed shortly after the Reserve Bank of Australia (RBA)’s monetary policy decision and the unveiling of further stimulus from the federal government.