Australia's big-four heads of funding gathered for the annual KangaNews and RBC Capital Markets roundtable in Sydney at the end of March 2026, a time of heightened global risk and market volatility.
Despite uncertain geopolitical conditions and compressed execution windows, the banks reported that liquidity remained available across global markets and that underlying demand for their issuance had held up strongly. While they pivoted toward more defensive funding products, particularly covered bonds, their experience suggested that well-capitalised issuers with diverse investor bases could continue to access funding, albeit at wider spreads and through narrower windows of opportunity.
Funding strategies in volatile markets
The banks shifted toward defensive funding products, with covered bonds emerging as the standout performer. Westpac executed a €1 billion covered bond transaction, while ANZ completed a US$ 2.25 billion covered bond and NAB issued A$ 1.75bn worth of residential mortgage-backed securities – both products that provide structural advantages during stress. Commonwealth Bank took a different approach, issuing a three-year US dollar senior deal as an "insurance trade," capitalising on the continued depth of US capital markets even as volatility increased spreads elsewhere.
The banks emphasise that while markets have experienced good and bad execution windows, primary market functionality has held. Short-term funding remains orderly, and Asian investor participation has been particularly supportive, especially in US dollar transactions.
The US dollar market is standing out from a primary perspective. Inflows are solid, concessions have been compressed and issuance statistics have remained significant. Despite the obvious need to navigate geopolitical windows with more caution, it all still looks very functional.
Gerard Perrignon, RBC Capital Markets
Australian Dollar market strength
There is continued evidence of strong liquidity available across the capital structure for the banks in their domestic A$ market. A broadening of new products available to the banks, underscores this availability, with key structural drivers including superannuation growth, increased middle market investor participation, and Asian participation, which remains well intact.
Capital flows and regulation
APRA’s phase-out of AT1 subordinated securities from the regultory capital stack for the Australian major banks has re-directed a significant amount of demand back into alternative Tier 2 product, though banks acknowledge difficulty isolating the precise impact. Proposed regulatory changes to liquidity rules for covered bonds in Australia were welcomed, as they open up the potential for a stronger domestic A$ covered bond market, as well as bolstering the Australian covered bond market’s claims for equivalence with the EU Covered Bond Directive.
Execution and investor access
The roundtable highlighted challenges relating to traditional two-day execution processes in the A$ market, with participants supporting greater flexibility including mandate announcements and one-day execution for regular issuers. Less frequently issued markets such as JPY and Swiss francs continue to provide useful diversification. Despite geopolitical challenges, in-person investor engagement remains important.
