Australian Banks Favor Deposits to Shield Ratings, Debelle Says

Australia’s banks are paying the same to raise funding through three-month deposits as they are on five-year unsecured bonds as they seek to safeguard credit ratings, central bank Assistant Governor Guy Debelle said.

Lenders’ debt issuance is holding in line with maturities even as funding costs drop, amid a “desire to maintain a strong rating, with the latent threat of a downgrade if wholesale issuance were to grow ‘too large’,” the Reserve Bank of Australia’s Debelle said in prepared remarks of a speech in Sydney today. “This reflects the somewhat misplaced assessment of ‘deposits good, wholesale funding bad.’”