The screenshot below shows a respectable $999m was drawn this week and a total of $5.837b is outstanding. There are 17 weeks remaining before this program terminates on 30/9/2020; however, the TFF remains expensive.
Ultra cheap short term NCD funding, overnight cash from the RBA at 0.13% and term repo opportunities at 0.18% all represent more attractive funding facilities at this time. Maybe liquidity will tighten up as we commence the last month of the financial year and a more healthy global risk appetite builds. I also feel there is a stigma associated with being too heavily reliant on regulatory support, especially if you are not running a stretched “negative funding gap” and challenged to find plentiful sources of funding. I sense we are in a quite unique “positive funding dimension” which is proving difficult to manage across various ADI business segments.
As I mentioned last week, the most significant event to influence liquidity supply and demand dynamics comes on 9 June 2020. The first large reverse repo maturity of $7.239billion offered to the market at the height of the COVID-19 liquidity intervention will be renegotiated, reduced or redeemed in full. The RBA’s action on that day will be closely watched.
Total ES balances and surplus ES balances have been stable at the previously reported numbers of approximately $77b and $53b respectively. The cash flow profile for June is usually one where outflows challenge the ADI sector. I predict ADI Treasurers will have modelled to lose far more than they actually do and the pressure on rates could remain one of abundance rather than scarcity and compound their current dilemma.
I will be happy to answer any questions you may have.

Peter Sheahan

Director Institutional Markets

P. (02) 9690 2188

M. 0416 207 203