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...and it begins again.

NAB issued in sterling, which swapped back to AUD will be BBSW plus about 175. CBA issued locally in AUD at a price of BBSW plus 175. BBSW is around 4.50% All up, 6.25%ish

It seems to high because it is really expensive money. BBSW is around 4.50 today, so I'll leave you to do the math....

Short version and at the risk of grossly oversimplifying, if you want to "use" money raised OS to fund your Aussie operations, you need to swap them back into AUD. As a result, your LIBOR plus 145 will end up as something like BBSW plus 175 which is about what it cost CBA to raise $...

Crazy. And then you start to do the maths on what unsecured bonds might now price at.....

So my good friends at CBA just issued $3.5B in covered bonds with a 5 year term at 175bp over bank bills. That's around the 6% mark, people. For secured borrowings!

Lazy effort but had to get on a plane...will be more reflective in due course ;)

There's that glitch in the Matrix again. One misstep to an Aussie bank calamity Directors of Australian banks will need to make some hard decisions given what is happening to their counterparts in Europe. If our banks make the correct decisions, the events in Europe will not cause an...

So a couple of weeks pass and the sense of "we've been here before" hasn't abated. Covered bonds, which were to be a cool new source of funds and take the pressure off locally, have proved expensive and less popular than hoped.ANZ and Westpac end up paying the equivalent of 150bps over bills...

It's a mistake to assess the cost of borrowing in foreign currency just by the interest rate. Telstra's USD 4.8% is not the same cost of money as 4.8% sourced locally in AUD.

Bonds are an IOU issued by an entity but usually not specifically "secured" by a specific asset. RMBS (as a general proposition), are IOUs secured against a specific asset (i.e. mortgages in a trust) . Covered bonds are a combination of each. The question of whether you'd buy one over the...

I prefer not to imagine the Germans singing anything. Which reminds me: The Germans

I know Mr Joye rather well and I can dispel any notion that he and Shad are the same person ;)

Perhaps we could invite the Germans to take over Italy, Spain and Greece, but this time without all the Blitzkreiging. Given they're likely to be paying for them anyway, it only seems fair.

Righto. I think I see what you did there. So, According to RPData's fancy AVM tools, my place is up 30% YOY. My place is in Australia 2011 has seen a substantial property boom in Australia Neat!

No...you said: I called ******** on your assertion of a post-GFC Austrlalian property boom. Not personal attacks, young fella. Just pointing out the obvious.

The relationship between the OCR and bank funding costs have been in a state of disconnect for some time. It's not outside the realms of possibility that, if things get nasty globally, a 25bp reduction in the OCR in Feb could be followed by increases in bank lending rates, not decreases :eek:

During GFS phase 1 the Big Issue was that banks suddenly couldn't be sure if their counter parties (other banks) had exposures that meant they might not be able to repay their debts. So they stopped lending to each other and the world financial system came to the brink of collapse...

Exactly the point I was making. I think because the signs were there in 07 for a few months before the market imploded completely, including a rapid blowout in RMBs spreads, the principal of "panic hard, panic early" seems to be top of mind atm. If it does go as badly as some are saying...

Of you don't beleive there has been a material and ongoing change to credit appetite and growth in Australia since 08 you are getting to world-beating levels of cognitive dissonance. For the safety of others, please stay away from windows and crowds. The relevance of the quote is simple...