The Reserve Bank of New Zealand (RBNZ) has added a corporate and asset-backed securities (ABS) funding facility to the suite of operations it is implementing to improve domestic liquidity conditions amid COVID-19 related volatility.
The A$15 billion (US$8.5 billion) made available to the Australian Office of Financial Management (AOFM) to support bank and nonbank lenders via purchases of asset-backed securities could be enough to account for the bulk of the public securitisation market for the balance of 2020.
The Reserve Bank of Australia (RBA) took unprecedented action on 19 March to provide a “bridge” to an expected economic recovery after the COVID-19 crisis. RBA governor Philip Lowe expects the support package to be required for the foreseeable future but says he can see better times on the horizon.
A stressed market in New Zealand is leading analysts to call for urgent intervention from the central bank. Hours ahead of an expected launch of QE in Australia, the suggestion is that the Reserve Bank of New Zealand (RBNZ) needs to follow suit to prevent further deterioration in local liquidity conditions.