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Investor Handout
December 2014
2
Australian Government Credit
1 of 12
AAA (stable) sovereigns
as rated by S&P
AAA ~ Stable
Last affirmed: 24 March 2014
Aaa ~ Stable
1 of 9
AAA (stable) sovereigns
as rated by Fitch, Moody’s and S&P
1 of 4
S&P AAA (stable) sovereigns
with bond markets over USD 250b
Last affirmed: 25 June 2014
Australian
Government
Securities
AAA ~ Stable
Last affirmed: 28 July 2014
Source: Bloomberg, Fitch, Moody’s, S&P
Major Economic Parameters
3
MYEFO 2014-15
Source: Treasury – MYEFO 2014-15
Growth in real GDP
4
Annual growth rate
Source: Australian Bureau of Statistics, Treasury – MYEFO 2014-15
5
A diversified economic base
Gross Value Added by Industry
Source: Australian Bureau of Statistics
Contributions to GDP growth
6
2002-03 to 2013-14
Where Australia has been…
Economic growth primarily driven by
household consumption and business
investment. Resource and mining
infrastructure is being built during this
period and net exports are a detractor
from growth.
2014-15 to 2017-18 (forecast)
Where Australia is going…
Economic growth will continue to be
aided by household consumption (a
long standing feature of the Australian
economy), but now net exports as
opposed to business investment also
feature. Resource projects are coming
online and the export stage is expected
to add significantly to growth over the
coming years.
Note: Business Investment and Public Expenditure have been
adjusted for second-hand asset sales between the public sector
and private sector
Source: Australian Bureau of Statistics, Treasury – MYEFO 2014-15
Contributors to growth in
Business Investment
25
7
Percentage points
Percentage points
Resources
Investment
20
25
20
15
15
10
10
5
5
0
0
-5
Non - Resources
Investment
Growth in
New Business Investment
-10
-5
-10
Consistent with CAPEX data, the outlook for Business Investment in 2014-15 remains subdued, with growth likely again to be below
trend. However, there are some positive signs including a rise in approvals for non-residential building over 2013. Non-resources
investment is forecast to pick up in 2015-16 as firms start to respond to improving demand and existing levels of spare capacity are
absorbed, with GDP growth returning towards trend.
2015-16 (F)
2014-15 (F)
2013-14
2012-13
2011-12
2010-11
2009-10
2008-09
2007-08
2006-07
2005-06
2004-05
2003-04
2002-03
2001-02
2000-01
1999-00
1998-99
1997-98
1996-97
1995-96
1994-95
1993-94
1992-93
1991-92
1990-91
-20
1989-90
-20
1988-89
-15
1987-88
-15
Source: Treasury
8
Terms of Trade
170
160
150
140
130
120
110
100
90
80
70
60
50
40
30
20
10
0
Index
(June 2008 = 100)
Index
(June 2008 = 100)
(F)
TWI
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
170
160
150
140
130
120
110
100
90
80
70
60
50
40
30
20
10
0
2014
Source: Australian Bureau of Statistics, Treasury – MYEFO 2014-15
9
Labour market
Annual data for year ending 30 June
12
Per cent
(Participation rate)
Per cent
(Unemployment rate)
11
(F)
Participation rate
Unemployment rate
10
66
65
9
64
Per cent
(Employ. to Pop.)
Per cent
(Unemploy. to Pop.)
62
6
60
8
7
5
64
58
7
4
6
63
56
3
5
54
4
62
2
61
Unemployment to
Population rate
Employment to
Population rate
52
3
2
1
50
1
0
60
1980
14
1984
1988
1992
1996
2000
2004
2008
2012
Per cent
Per cent
12
Unemployment rate
(Females)
0
1980
14
12
10
48
2016
80
1984
1988
1992
1996
2000
2004
2008
2012
Per cent
(Females)
Per cent
(Males)
58
Participation rate
(Females)
78
56
10
54
76
8
52
8
74
6
50
6
2
0
0
1984
1988
1992
Participation rate
(Males)
4
2
1980
48
72
Unemployment rate
(Males)
4
1996
2000
2004
2008
2012
60
46
44
70
42
68
40
1980
1984
1988
1992
1996
2000
2004
2008
2012
Source: Australian Bureau of Statistics, Treasury – MYEFO 2014-15
10
Headline & underlying inflation
8
Per cent YoY
Per cent YoY
Forecast
7
6
8
7
6
RBA Cash Rate
5
5
4
4
Headline Inflation
3
3
2
2
Underlying Inflation
1
0
1
2002
2004
2006
2008
2010
2012
2014
2016
0
Source: Australian Bureau of Statistics, Treasury – MYEFO 2014-15
11
International interest in ACGBs
Source: Australian Office of Financial Management, Australian Bureau of Statistics
What drives the change
in non-resident holdings
12
Source: Australian Bureau of Statistics, Reserve Bank of Australia, Australian Office of Financial Management
Australia’s Budget Balance
13
Source: Treasury – MYEFO 2014-15
Australia’s Net Debt Position
14
Source: Treasury – MYEFO 2014-15
Australian
Government Securities
Treasury Indexed Bonds
Treasury Bonds
A$ Billion
A$ Billion
$316.4
15
Treasury Notes
A$ Billion
$8.0
$25.7
$80.0
$7.3
$68.0
$57.4
$4.0
$4.0
Net Iss.
2013-14
Gross Iss.
2013-14
Net Iss. (F)
2014-15
$41.2
Gross Iss. (F)
2014-15
$5.2
 20 lines currently on offer
 10 lines with more than
AUD 15 billion on issue
 Maturities from 2015 to
2037
 7 lines currently on offer
 Maturities from 2015 to
2035
 3 lines currently on offer
 Maturities typically less
than 6 months
Source: Australian Office of Financial Management
Australian Government Bonds on issue
16
Source: Australian Office of Financial Management, Australian Bureau of Statistics, Treasury – MYEFO 2014-15
17
Treasury Bonds
20 lines on issue, 10 of which have more than AUD 15 billion outstanding
Source: Australian Office of Financial Management
Treasury Indexed Bonds
18
Amount shown is the face value unadjusted for changes in the CPI adjusted capital value of the bond
Note: On 2 May 2014, the AOFM conducted a conversion tender that offered an opportunity to holders of the August 2015 TIB to convert their holdings into the
November 2018 TIB line. The outcome of which saw AUD 2.03893 billion face value converted from the August 2015 line into the November 2018 line and thereby
reducing the volume on issue of the August 2015 to AUD 1.156839 billion.
Source: Australian Office of Financial Management
Market Makers – Treasury Bonds
18 major international and domestic institutions willing
to make markets in Treasury Bonds
19
Market Makers – Treasury Indexed Bonds
10 major international and domestic institutions willing
to make markets in Treasury Indexed Bonds
20