Simon Pannett | Feb 1, 2019

Changes to banking rules are set to have a meaningful impact on New Zealand’s fixed interest market in 2019:

  • A proposed rule forcing banks to hold more equity capital will make the banking sector more stable, however, it will come with a raft of second-round impacts. Chief among those will be the impact on banks’ willingness to lend. This is what we are watching most closely;
  • Separately, we may see an explicit preference for depositors over bond-holders in the event of default. If enacted, this may partially offset the credit benefit on senior unsecured paper of higher capital levels; and
  • We are also likely to see the issuance of a new high-quality mortgage-backed security type.

This paper examines these three changes …

More here >