Australian Prudential Regulation Authority
After hopefully overcoming the worst of the COVID-19 pandemic, the Australian securitisation industry is taking stock of a period of resilience and a reshaped competitive landscape. Top of mind for market participants are the way crisis response has changed the cost of funding unevenly for different issuer types and mooted changes to responsible-lending rules.
Australian house prices have once again defied expectations, this time from the early stages of the COVID-19 pandemic, by resuming a seemingly unstoppable upward trajectory. While the Reserve Bank of Australia continues to insist rate hikes are not coming in the medium term, speculation is mounting about macroprudential intervention and financial-stability risk.
The Australian Prudential Regulation Authority released its draft prudential practice guide on climate-change financial risks for consultation on 22 April, setting out voluntary prudential management related to governance, risk management, scenario analysis and disclosure. Some industry participants are urging the regulator to use this as a first step to mandatory risk disclosure.
The Basel Committee on Banking Supervision published a report on 14 April detailing the transmission mechanisms of physical and transition climate risks into financial stability risk. Risks can be observed through traditional lenses, but the committee says more research is needed fully to understand the potential impact of climate change on the financial system.
KangaNews hosted its annual roundtable discussion for Australia’s leading bank fixed-income strategists in February – just as a new round of market speculation on the path of Reserve Bank of Australia stimulus was kicking off. The strategists remain convinced that Australian QE is set for some time, however – and that the market will continue to revolve around the gravitational pull of the central bank.
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.