Like many other governments around the world, the Australian Labor government recently extended a lifeline to banks, guaranteeing all cash deposits and offering to guarantee bonds with a maturity of up to five years. So far, Commonwealth Bank of Australia (CBA) is the first and only mover, announcing plans to issue $1.25bn ($826m) in new debt, $750m of which will be government-guaranteed bonds with five-year maturities. However, it will not be the last.
Michael Bush, head of fixed-income research at National Australia Bank, says the market expects other major banks to use the guarantee in the offshore market. He says: “ANZ and Westpac were looking intently at the US market to issue that debt and Macquarie is also said to be considering it.” No announcements have yet been made but Mr Bush is certain further issuance is imminent, saying that he expects more issuance in the new year.
