Cost-conscious semi states look to maintain funding advantage

The credit quality of many Australian states is clearly under pressure, with GST revenue declining and expenditure rising. As far as the states’ funding programmes are concerned, this may not matter. They enjoy strong support from the Commonwealth. They command lower borrowing costs than most SSA borrowers. And their level one status for LCR purposes means they can depend on continued demand from domestic banks. To discuss their future funding requirements and strategies, a number of the Australian states gathered at the EuroWeek semi-government borrowers roundtable in Sydney in July.