Australian banks are well placed to repay borrowings under the Term Funding Facility, the Reserve Bank said.
The RBA reported in the latest Financial Stability Review that “Australian banks are generally comfortably ahead in their funding plans, which affords them flexibility to defer bond issuance for a period if there are renewed strains in global funding markets”.
Ninety-two banks used the TFF, eventually drawing down A$188 billion. They are due to repay $76 billion between April and September this year. The balance will be repaid over the next 15 months.
The RBA said: “Prior to the failure of some banks in the United States in early March, Australian banks had already raised a large amount of wholesale debt funding. This amounted to net bond issuance of $20 billion over the preceding six months.
“This large volume of bank bond issuance was comfortably absorbed by domestic and offshore bond markets,” the RBA said.
However, the cost of issuance has increased as bond spreads have widened internationally.
Volatility in bank funding markets resulted from the full write-down of hybrid securities issued by Credit Suisse.