Australian banks face their biggest ever refinancing task in 2023 and 2024, when they must repay money borrowed under the Reserve Bank’s term funding facility, on top of normal bond maturities.
According to the RBA’s latest Financial Stability Review, banks drew A$81 billion under the TFF that is due for repayment around September 2023.
They have an additional $109 billion available up to June, of which $16 billion has already been drawn. Assuming they take the bulk of their allocation, that money would be due for repayment in mid-2024.
The RBA said that, together with bond maturities around those dates, bank would need to refinance more than $120 billion in the second half of 2023 and almost as much again in the middle of 2024.
These amounts are more than double what the banks would refinance in a normal six-month period.
The RBA said it expects the banks to use a number of options to manage the task, including spreading out the refinancing task and managing the timing mismatch through holding excess liquid assets.
It said banks have access to low-cost deposit funding. They have already reduced their funding from wholesale debt and may continue to do so.