BISCHOFF The original concept of covered bonds was as a triple-A contingent funding tool. If the next 12-18 months features more volatility and significant periods of spread widening, having a triple-A instrument available should allow access to certain offshore markets when senior is volatile.

If these conditions don’t eventuate we will likely continue to focus our covered-bond issuance on duration and investor diversity in core markets.

ROBB The double counting of covered bonds under the bank levy detracts from the relative economics and the asset class gets unfavourable net stable-funding ratio (NSFR) treatment.

Therefore it’s less appealing now than it was historically as a funding tool. Though the two transactions we recently completed – €1 billion (US$1.2 billion) and US$1.25 billion, both for five years – received incredibly strong investor response.

They came during choppier periods for senior debt, so we were very pleased with the outcome. But, all things considered, we mainly focus on covered bonds as a long-dated private-placement tool.

KAU The economics Kylie Robb mentions make it very hard for covered bonds to stack up with other funding options – and I’d add the liquidity-coverage ratio (LCR) impact as another headwind. It’s hard to justify covered bonds on an economic basis in positive senior-unsecured funding conditions like those we have had for the past couple of years.

I agree with Alex Bischoff, though, that it’s a very important option to have on a rainy day – and it has proved itself in this respect to some extent already. We haven’t issued for about two years, but we are going to the European Central Bank covered-bond conference for the first time in about five years in 2018, because we think it’s vital to stay in touch with investors.

ROBB We continue to be a strong supporter of our Medallion RMBS programme and we have around A$14 billion (US$1.2 billion) outstanding. It makes up about 5 per cent of our term-funding portfolio. Investors also tell us they are keen to continue to see issuance from this programme.

We sought and received capital relief in both our two most recent RMBS transactions, which makes it much more appealing economically. I expect this will be the format we use going forward.

ZILELI We also see value in the product and we issued a A$2 billion RMBS transaction earlier this year. We have also moved to capital-relief format, which makes it an efficient product from an NSFR perspective as well as for the LCR. This is because it’s match-funded instead of having large maturity blocks.

We also see strong investor engagement both domestically and offshore. So it is definitely a product we will continue to support going forward.

ROBB On the investor side, it has also been really pleasing to see the level of demand for junior tranches – this has been tremendous, in breadth and depth. One of the early concerns about securitisation was placement of these tranches, but in fact we have had allocation challenges.

BISCHOFF We continue to see securitisation as a core part of our funding platform. However, given the liquidity environment we have experienced over the last few years there have been other options available to us as an issuer.

It’s also notable that current RMBS pricing is close to five-year domestic senior-unsecured, which suggests senior is still the more favourable issuance option. Traditionally we saw this spread closer to the midpoint of 3-5 year senior levels.

Looking forward, we continue to see a diverse pool of demand for RMBS that we haven’t tapped into for some time – and this could become more relevant. At the same time, we have been using our auto programme consistently as a funding diversification tool. We compare ABS and RMBS, so we can afford to offer something to securitisation investors in a format which offers appropriate value to both sides.

KAU I’ve mentioned already that changes to mortgage risk weights could be a game-changer for RMBS. As a funding-only tool, given all the cost inhibitors, it is probably off the table for the foreseeable future. Capital relief – and the quantum of capital relief – is the main driver.