since mid 2007 ; despite the significantly larger volume that has been brought to market ( graph 7 ). graph 7 deal structures have continued to evolve with further issuance of bullet tranches to manage prepayment risk. one recent deal was structured without a serial pay trigger, which has been the norm in recent years, apparently in anticipation of the changes to the apra ’ s prudential standard on securitisations outlined late last year. 7 2013 saw the first australian cmbs issue since 2011, and although volumes have remained low this has been followed by a further two transactions. issuance of other abs has remained strong, with 2013 recording the highest level of gross issuance on record with a sizable pick - up in australian dollar issuance. for an outline of apra ’ s proposed reforms to aps 120 see littrell c ( 2013 ), prudential reform in securitisation, presentation to the australian securitisation forum, sydney, 11 november. available at < http : / / www. apra. gov. au / speeches / documents / charleslittrell - australian - securitisation - forum11november2013. pdf >. one of the major thrusts of the proposed changes is the introduction in the prudential standards of the so called “ skin in the game ” for adi issued rmbs. rmbs issued since mid 2007 have typically included a serial pay trigger which after certain conditions are met, mainly satisfactory deal performance for several years after issuance, switch the principal payment order from paying tranches in order of seniority to paying all, or most tranches, proportionately to their outstanding amount. this feature was introduced in the market to address the higher cost on junior tranches in the wake of the global financial crisis and for adi sponsored rmbs, where the sponsor has been limited to hold no more than 20 per cent of the deal to qualify for capital relief, to cap the share of the rmbs held by the adi. bis central bankers ’ speeches corporates australian corporates have continued to have good access to bond markets both domestically and offshore, raising a total of $ 35. 1 billion of new bonds since the start of 2013 ( graph 8 ). while the amount issued has been less than in 2012, issuance that year was underpinned by significant bond issuance by the large australian miners. part of the reason for that strong issuance was that the miners were able to access the market at least

guy debelle : the australian bond market address by mr guy debelle, assistant governor ( financial markets ) of the reserve bank of australia, to the economic society of australia, canberra, 15 april 2014. * * * i would like to thank ivailo arsov, mathew brooks and karl stacey for their assistance in preparing this speech. thank you for inviting me to talk at the economic society here in canberra. today i am going to walk you through the current state of the australian bond market. the bond market plays an important role in the financial structure of the australian economy and it is timely to examine its structure and functioning with the financial system inquiry underway. i will start today by providing an overview of the composition of the australian bond market and how this has changed in recent years. then, i will discuss more recent developments in the market since the start of 2013, focusing particularly on two trends that emerged last year : the nascent signs of deepening of the domestic corporate bond market and the pick - up in securitised issuance. i will also talk a little about the prospect for market - based finance, of which bond issuance is an important part, playing a larger role in the future than it currently does. shape of the australian bond market the evolution of the australian bond market over the past several years has been shaped to a large extent by the fallout from the global financial crisis. prior to the crisis, the market comprised mainly bonds issued by the australian banks and asset - backed securities. together these accounted for just over half of the outstanding stock of australian bonds in june 2007. bonds issued by the public sector were a relatively small share of the market, at 16 per cent of the total outstanding ( table 1 ). overall, the size of the bond market in mid 2007 was equivalent to around 84 per cent of australia ’ s annual gdp. in the subsequent seven years the stock of australian bonds on issue has increased to reach the equivalent of nearly 100 per cent of gdp. the increase has mainly been the result of debt issuance by the commonwealth and state governments to finance their budget deficits as they sought to support economic growth through the crisis. bank bond issuance has slowed down in the last couple of years as australian banks have sought to shift towards more deposit funding. however, the stock of bank bonds on issue is significantly higher than it was just before the start of the global financial crisis, reflecting the strong issuance of bank bonds in 2008 and 2009 as the financial system was