approved the recommendation and further discussions took place through the respective lawyers of npa and the agent. a settlement was finally agreed between the agent and the ceo of npa, and advised to the npa board in may 2008. following the september 2007 npa board meeting, mr thompson resigned as chairman. the reserve bank then appointed mr campbell as interim chairman. a new ceo of npa was appointed in early 2008. in april 2008, mr campbell was succeeded by dr bob rankin. dr rankin also took on the chairmanship of securency after mr thompson resigned from that role in march 2008. bis central bankers ’ speeches post - termination payments to agents by securency securency sought legal advice from its external legal advisers on its obligations to the agent that it terminated. on the basis of this advice, the securency board at its 11 – 12 september 2007 meeting decided that the agent should be paid for work done prior to termination in terms of the contract. the 2009 allegations about securency on or about 20 may 2009, the age sent securency a number of questions regarding securency ’ s use of agents, which securency responded to on 22 may 2009. on 21 may 2009, the chairman of securency, dr bob rankin ( who had succeeded mr thompson as chair of the board of securency ) contacted kpmg to discuss conducting a review of securency ’ s agent policies and procedures. the age subsequently indicated, on 22 may 2009, that it was going to run a story on the matter. on 22 may 2009, dr rankin contacted the australian federal police regarding the matter and proposed that an investigation be conducted. on 23 may 2009, the age published articles regarding securency ’ s use of agents. subsequent stories noted that npa had discontinued the use of agents in 2007. that same day, dr rankin formally requested that the afp conduct an investigation in connection with the allegations made in the media. dr rankin consulted with the reserve bank prior to making this request. at his first meeting with the afp on 26 may 2009, dr rankin referred to the audit conducted at npa in 2007 and the freehills report and made them aware of the documents and the afp indicated that it would request those documents if and when they were required and that they had a certain process to follow. those documents were subsequently requested in approximately january 2010 and provided on 1 february 2010. at the meeting on 26 may 2009, dr rankin also raised with the afp the prospect of securency obtaining an independent

##shing returns, at least for corporate investment. as noted earlier, the data make clear that past rounds of lsaps have pushed down interest rates and term premiums. but the further the term premium is driven into negative territory, and the more financing constraints are thereby relaxed, the more the previous logic comes into play, and hence the weaker is likely to be the response of aggregate spending to further downward pressure on long - term rates. the corporate finance example is also consistent with what we have observed in markets in recent months. issuance of both investment - grade and high - yield bonds has been robust. indeed, domestic nonfinancial corporate bond issuance is on pace to set a record in 2012, and the speculative - grade segment appears on track to register a new high for the year. at the same time, a large fraction of issuance has been devoted to refinancing – either to retiring existing debt or to payouts to equity holders via dividends and share buybacks. these uses of proceeds have accounted for about two - thirds of all issuance by speculative - grade firms so far this year. such patterns are what one would expect based on the logic i have just discussed. another way to make a similar point is to note that as borrowing costs have fallen, federal reserve staff estimates of the expected return on the stock market ( using a model based on analysts ’ earnings expectations ) remain high by historic standards. this unusually large divergence in the costs of debt and equity – due in part to the cumulative effects of our lsap policies – is likely to be one factor that makes debt - financed repurchases of equity attractive. let me turn now from treasury - based lsaps to those involving mbs. if there is to be any difference between the two, one necessary condition is that there is some form of market segmentation, so that buying mbs has a different effect on the constellation of credit - market rates than buying treasury securities – in other words, it ’ s not all about just removing a certain amount of undifferentiated duration from the market. judging by what happened in the wake of the committee ’ s policy announcement on september 13, this segmentation condition seems to be clearly satisfied – indeed, i would say surprisingly so. 3 in particular, while nominal long - term treasury yields were roughly unchanged on the day of the announcement, yields on mbs fell dramatically. moreover, although the pass - through to primary mortgage rates has been