Coolabah Capital Investments was delighted to cornerstone the first-ever RMBS bond issue—offered by CBA—that has priced off the RBA cash rate rather than the traditionally-used Bank Bill Swap Rate (BBSW).
This removes bank credit risk from the benchmark interest rate and will likely open the door to other RMBS issuers to follow in CBA’s pioneering footsteps.
CBA’s Treasury team has long been one of the best in the world at striking the right balance between the needs of bank shareholders and the returns required by bank creditors such as depositors and bondholders.
They were subject to much criticism from peers for junking the maligned BBSW benchmark, which the RBA was keen to see replaced by the cash rate, but persevered through what was a complex and uncertain process.
We pay a great deal of attention to the behaviour of bankers and their Treasury teams, which we think offer a crucial insight into the organisation’s broader culture.
Issuers know we are relentless in resisting myopic Treasury teams that seek to suck every ounce of value out of a deal, in a zero-sum, transactional fashion.
We prefer to partner with issuers who are “long-term greedy” and leave value on the table for both the borrower and the lender, especially during periods when money is universally very cheap.