APAC Covered Bonds Quarterly - 2Q19

...2 Ratings and Over-collateralisation Summary 3 Programme Breakeven OC Summary 5 Australian Covered Bond Programmes Summary 6 New Zealand Covered Bond Programmes Summary 7 Singapore Covered Bond Programmes Summary 8 South Korea Covered Bond Programmes Summary The Australian Prudential and Regulation Authority (APRA) responded to submissions following its proposed increase in the total loss absorption capacity (TLAC) of Australian banks published on 8 November 2018. APRA will require major domestic systemically important banks (D-SIBs) to increase their total capital by 3pp of risk-weighted assets by 1 January 2024, which is to be met by raising additional Tier 2 issuance. Fitch Ratings expects this to limit the volume of covered bonds issued by Australia's major banks. Spreads on senior unsecured debt are likely to remain tight to those of covered bonds, which could constrain covered bond issuance from Australia as well. Given this, Fitch expects that Australian covered bonds will mostly...

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