What might cause interest rates to drop even further?

Discussion in 'Property Market Economics' started by Humphrey, 28th Mar, 2020.

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  1. Waterboy

    Waterboy Well-Known Member

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    Denial is Not a River in Egypt
    Suncorp just recently issued 5-year $750M covered bonds, floating rate notes priced at 3m BBSW+112 after having launched at the ‘+115-120bps area’. This pricing is consistent with recent pre-covid 'normal' margins.

    If there's one thing learned from the GFC and COVID-19, the RBA and the Government will do whatever it takes to avoid the proverbial crap hitting the fan. That's why I'm not too worried about future GFCs. We have quite a reliable backstop.
     
    Waterboy, 1st May, 2020
    #21
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  2. headsonbeds

    headsonbeds Well-Known Member

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    I’ve got a BBSW tied loan reset this week. I can’t work out whether to set at 3 months at .15 ish or .6 for 3 years. Bank tells me the shorter term Rates ie 3 month is very low as the super funds have to park a lot more money than usual at short term rates.

    Any thoughts on which way to go. I’m thinking of doing 3 months and see what it’s doing at the end of that.

    Thanks
     
    headsonbeds, 4th May, 2020
    #22
  3. Waterboy

    Waterboy Well-Known Member

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    In the current climate of so many uncertainties, I'd go with my gut feeling -- 3 months.

    Disclaimer: The suggestion does not constitute financial or other professional advice and is general in nature. It does not take into account your specific circumstances and should not be acted on without full understanding of your current situation and future goals and objectives by a fully qualified financial advisor.
     
    Waterboy, 4th May, 2020
    #23
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  4. Wattle

    Wattle Active Member

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    Don’t disagree with you there with the “whatever it takes” - I didn’t realise Suncorp issued recently, I do know covered bonds usually command lower spreads given the added credit protection over normal RMBS, but there is a cap on covered deals banks can issue, I’ve not looked into it but I would be interested to know what the spread on unsecured long term debt would be. I would have thought most of the banks would be parking any debt issuance and simply drawing on the free money RBA TFF for the next 6 months at least.

    Back to your point on whatever it takes, I suspect there will be round 2 TFF is funding blows out.
     
    Wattle, 8th May, 2020
    #24
  5. Waterboy

    Waterboy Well-Known Member

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    Waterboy, 9th May, 2020
    #25
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  6. Waterboy

    Waterboy Well-Known Member

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    Just priced a Non-ADI RMBS last Friday 8/05/2020.
    Class A2 at BBSW+ 120bps.
    Not bad at all under the current climate!
     
    Waterboy, 10th May, 2020
    #26
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