deals from the mining sector. the december quarter was the strongest on record for domestic activity, with bhp ’ s $ 1 billion transaction receiving significant interest. the deal is the largest ever non - credit wrapped transaction in the domestic market by a corporate issuer. to place these more recent trends in a longer - term context, i ’ d like to take a moment to consider how australia ’ s corporate debt markets have evolved into their present form. the current corporate bond landscape is the result of a number of significant developments over the past century, outlined in a recent reserve bank research discussion paper published in late 2012. 4 this paper was the result of a substantial data collection exercise and extends our understanding of australian bond issuance back to 1917. broadly speaking, trends in bond issuance by australian corporations can be broken down into three distinct periods ( graph 7 ). the first, which extended throughout the first half of the see black s, j kirkwood, a rai and t williams ( 2012 ), “ a history of australian corporate bonds ”, rba research discussion paper no 2012 – 09. bis central bankers ’ speeches 20th century, actually saw the peak in the size of the corporate bond market relative to gdp. this period, particularly prior to world war ii, was characterised by significant issuance by government - owned public trading enterprises ( ptes ). private investment, on the other hand, was largely financed through internal funds, and the modest private bond issuance that did occur was mostly to fund mining investment, much of it by corporations that later went on to become bhp. graph 7 the bulk of the issuance by government - owned corporations took place in the 1920s. the proceeds were used mostly to fund public works programs, with investment by these ptes accounting for as much as 7 per cent of gdp. half of the bond issuance was by victorian water and sanitation boards alone. public works projects undertaken here in sydney, on the other hand, including the building of the sydney harbour bridge and sydney ’ s underground railway system, were mostly funded directly by governments. over the 1930s and 1940s, the stock of corporate bonds outstanding declined as governments reallocated resources away from the ptes to finance war - related expenditure. by the end of the second world war, the corporate bond market had shrunk to around 18 per cent of gdp. as the economy expanded following world war ii, the stock of corporate bonds remained relatively small as a share of gdp. at the same time, the corporate bond market

related financial difficulties : evidence from australian micro - level data ’, rba research discussion paper no 2014 – 13. 10 some analysis we have conducted on the representativeness of the securitisation dataset suggests that it has fewer high lvr loans than the broader population of loans. there is also a tendency to include loans in securitisation pools only after they have aged somewhat ( i. e. become more ‘ seasoned ’ ). 11 the share of new investor loans with very high lvrs ( above 90 per cent ) at the time of origination has been declining for a few years and is below that for owner - occupier loans ( reserve bank of australia ( 2017 ), financial stability review, april ). this feature is not apparent in the data i ’ ve shown here, which is based on the current lvr for the stock of outstanding securitised loans, including those that are well advanced in age. 12 apra have instructed lenders to implement stricter underwriting standards for interest - only loans with lvrs greater than 80 per cent ( see : ). 13 the 90 + days arrears rate refers to the share of loans that have been behind the required payment schedule or missed payments for 90 days or more but not yet foreclosed. 14 these regions are defined in terms of the abs ’ s statistical areas level 4 ( sa4s ), which are geographic boundaries defined for the labour force survey. the boundaries for most sa4s cover at least 100 000 persons. the securitisation dataset identifies loans according to the location of the mortgaged property. 13 / 13 bis central bankers'speeches