Bank funding costs poised to end European crisis?

From Banking Day comes the news that on Friday:

…Westpac priced the Series 2013-1 WST Trust. The A$1.9 billion class A tranche, with a weighted average life of three years, was priced at 85 basis pointed over the one-month bank bill swap rate.

Pricing on the $71 million class B tranche and the $97 class C tranche was not disclosed.

Westpac launched the deal earlier in the week seeking $750 million, but it ended up issuing $2.1 billion.

These are pre-European crisis rates, though still well above pre-GFC rates. Checking in on the CDS market, which is an excellent proxy for long-term wholesale yields, on Friday prices hit their lowest levels since late 2010 and look likely to finally breach the European crisis floor of 100bps:

Houses and Holes
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    • Issued in AUD, so no cross currency swap involved. Suspect total cost is BBSW +c1.2%. cf home loans being shovelled out the door in the mid to high BBSW +2%s. Securitisation is baaaaack. Not great news for bank margins

  1. I hope this is a temporary situation. The last thing the AUD needs is cheap offshore funding flowing through the banks into the open arms of confident consumers.

  2. Can they actually load up Australia with more private debt? Staggering – but I’m betting yes (for a while).

    But with the ToT rolling over this will be compelling viewing.