"You will see higher borrowing costs which means that it will impact (banks') net interest margin a little bit," said John Guarnera, senior corporate analyst at BlueBay Asset Management in New York, who said that he thought the market could eventually cope with the extra bonds. "To me, this represents a wealth transfer from the Australian economy into offshore investors. "Regulators elsewhere have begun allowing banks to raise capital through so-called senior Tier 3 bonds. "If they (the banks) needed to go down that path, it's going to be a challenge from what we can see," said Rod Everitt, head of Deutsche Bank’s bond syndicate in Australia and New Zealand. "They'll have to issue a lot more expensive debt, and certainly more expensive than for many of the other banks around the world."

Source: The Star December 18, 2018 06:00 UTC