Westpac On Issuance Dynamics Post-TFF

Westpac note that "there is still A$90bn or so to be drawdown from the RBA's TFF before 30 June. That is obviously a significant chunk of funding, and when it ceases operation. the facility will have provided the ADI community with almost A$200bn of funding over the past 15 months. At the same time, deposits as a percentage of the funding mix are higher than pre-pandemic. The impact of this on other sources of funds are well known. Since 2016, July and August have seen both offshore and domestic issuance surge, before slowing into a large surge in November. The market is anticipating a similar profile, with pent-up investor demand for domestic paper likely to be satisfied quickly. The XCCY term structure has also already steepened up to reflect those risk rewards and it is not clear that Kangaroo issuance into year-end will be sufficient to cap any further spread widening."