News on Covered Bonds: Australian Banks Sets Covered Bond Market Rolling

Australian Banks Sets Covered Bond Market Rolling

4th October, 2012: Post the global financial meltdown, markets had gone gung-ho on Covered Bonds, however, low yields and poor performance of cover pools had left the investors dissatisfied. Amidst the rise and dismal performance, the Australian Banks and lenders have lent a hand to provide impetus to the Covered Bonds market world-over.

Commonwealth Bank of Australia, Westpac Banking, Australia and New Zealand Banking and National Australia Bank has been ranked among the top 10 sellers of covered bond worldwide with over $36.6 billion issuances during 2012-13.

The bonds issued by the top issuers of the nations have the following attractive features:

  •       High yields as compared to the German Covered Bonds

  •       Flexible Coupon Rates

  •       Investor confidence gained due to proper repayment of mortgage loan amount by the households

  •       Performance regulated by effective and efficient legislations framed by the Government

  •       Cheap bonds with guarantee of fetching proper returns.

CBA has set the ball rolling, encouraging others issuers to issue similar bonds in the market including approaching the U.S. market. The Covered Bond issuances in Australia by issuers, this year have provided an impetus to the Covered Bond markets globally and have stabilized the economy to a great extent.

[Reported by: Piyush Sinha]