Bond plan a good move

Townsville Bulletin - - Investor -

THE fed­eral gov­ern­ment’s pro­posal to al­low Aus­tralian banks to is­sue cov­ered bonds will help lessen len­ders’ re­liance on off­shore fund­ing mar­kets, two ma­jor rat­ings agen­cies say. The Gov­ern­ment re­leased draft leg­is­la­tion as part of a suite of pro­pos­als to make banks more com­pet­i­tive for mort­gages and busi­ness loans. Cov­ered bonds would al­low for a cheaper source of fund­ing for banks as they gen­er­ally carry a AA or AAA credit rat­ing, and higher than the typ­i­cal rat­ing of an is­su­ing bank. The move would partly ad­dress a re­liance on off­shore mar­kets.

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