News
The Reserve Bank of Australia announced measures on 19 March designed to support the economy. Along with the expected cut to the cash rate and QE – to be delivered in the form of yield-curve targeting – the RBA will roll out a term-funding facility for banks and additional funding for lending to SMEs alongside “a complementary programme of support for the nonbank financial sector, small lenders and the securitisation market”, which the Australian Office of Financial Management (AOFM) will deploy.
A stressed market in New Zealand is leading analysts to call for urgent intervention from the central bank. Hours ahead of an expected launch of QE in Australia, the suggestion is that the Reserve Bank of New Zealand (RBNZ) needs to follow suit to prevent further deterioration in local liquidity conditions.
Australia’s major banks are well prepared to support households and businesses as they come under increasing pressure from an economy stalled by COVID-19, analysts and funders say. Even as financial market liquidity becomes more challenged, federal government, central bank and regulatory positioning stands the banks in good stead.
On 18 March, the Reserve Bank of New Zealand (RBNZ) announced it will delay or slow down most of its regulatory initiatives for an initial period of six months to reduce the regulatory impost on financial institutions and free up central bank and industry resources to support the economy and tackle the challenges created by COVID-19. The announcement follows the RBNZ’s decision on 16 March to cut the official cash rate to 0.25 per cent from 1 per cent.
On 17 March, following the New Zealand government’s NZ$12.1 billion (US$7.4 billion) COVID-19 stimulus package, New Zealand Debt Management (NZDM) announced its borrowing programme for the 2019/20 financial year has increased to NZ$13 billion. This is NZ$3 billion higher than forecast following the New Zealand government’s half year economic and fiscal update 2019 on 11 December. In the fiscal year to date, NZ$7.5 billion has already been issued.
Following an emergency meeting of its board, the Reserve Bank of New Zealand implemented an out-of-cycle 75-basis-point cash rate cut and signalled its next step would be to buy government bonds, if necessary. The central bank also delayed implementation of new capital standards for banks by 12 months.
On 16 March, the Council of Financial Regulators released a statement on its plans to ensure Australia’s financial markets continue to operate effectively and that credit is available to households and businesses in the face of the COVID-19 crisis.
Sustainability-linked loans (SLLs) continue to gain traction in Australia. Wesfarmers is the latest borrower to establish a facility linked to environmental and social goals, which it says are ambitious and will improve its overall credit profile.
On 16 March, Transpower New Zealand (AA-/Aa3) announced it is delaying the increase to its existing March 2025 line, revealed on 28 February, given the significant financial market volatility caused by COVID-19. The issuer says it will continue to monitor market conditions, according to Westpac Banking Corporation New Zealand Branch.
On 16 March, Bank of Queensland (BOQ) launched a residential mortgage-backed securities (RMBS) refinancing of its BOQ Series 2015-1 Reds Trust deal. Total indicative volume for the forthcoming deal is A$233.3 million (US$143.9 million) and is expected to price on the day of launch. National Australia Bank is arranger and joint lead manager alongside ANZ and Westpac Institutional Bank.
