The appropriation bill which supports the Australian government's Guarantee Scheme for Large Deposits and Wholesale Funding was passed at the end of the week before last but we have yet to see any bond issuance from the Australian banks. That said, nab, ANZ and Westpac were all flagged during the week as having issues in the wings. The Australian reported on Friday that all three had issued commercial paper in the Euromarket: ANZ, $10 billion; WBC, $3.3 billion; and nab, $2.2 billion. If this is what we were waiting for, it is only a short-term solution to a longer-term problem but it may in fact be a good move. It seems a case of investor fatigue is emerging.Globally, banks have been issuing government guaranteed bonds since the second last week of October. By our reckoning, and no doubt we have missed some issuance, such issuance to date amounts to US$32.9 billion, €29.5 billion and £6.4 billion or approximately US$80 billion, in total. Much of this issuance has come in the last two weeks as the US banks have been able to issue under a US government guarantee. And over the same period, credit spreads have moved noticeably wider after initially contracting in the European markets. Initial European issuance attracted a spread of 25 basis points over mid-swaps for a three-year term to maturity. Over the next month this spread narrowed to 15 bps.Issuance by US banks the week before last saw US dollar denominated funding being raised at mid-swaps plus 85 bps, for the same term to maturity. This startling difference in credit spreads was baffling but is largely explained by the euro and sterling basis swaps, which have become very volatile and have moved to very wide, negative levels since mid September (or around the time of Lehman Bros collapse).But investor fatigue started to show when JP Morgan issued three-year bonds in the Euromarket (denominated in euros and pounds sterling) the week before last and paid 40 bps over mid-swaps. Last week similar bonds denominated in euros and sterling were issued with credit spreads ranging from 30 bps to 45 bps (included in this issuance was £750 million from National Australia Bank subsidiary, Clydesdale Bank, at 35 bps over mid-swap for three years), while spreads on US dollar denominated issues widened to 93 bps. If the Australian banks have in fact issued large volumes of commercial paper offshore, they will have bought themselves a month or three, during which time the markets will have some opportunity to digest the rush of issuance that is currently under way. It is likely that credit spreads will again start to narrow as issuance pressure eases. The risk is that the issuance doesn't let up, but that would seem unlikely given the global economic slowdown and the likelihood that the current rush is the result of pent-up funding pressure from a couple of months of little or no issuance.Nevertheless, when the Australian banks do get to issue Australian government guaranteed bonds offshore, they may