Raising capital in a changing global environment Michael Ullmer

1. Raising capital in a changing global environment Michael Ullmer Group Executive, Institutional and Business Services Commonwealth Bank of Australia 20 March 2003

2. Disclaimer The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation, 20 March 2003. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate.

3. Speaker’s Notes • Speaker’s notes for this presentation are attached below each slide. • To access them, you may need to save the slides in PowerPoint and view/print in “notes view.”

4. Growth of the domestic corporate bond market Total non government Australian debt issuance by year 1998 to 2003 Source: Commonwealth Bank

5. Australian corporate bond issuance by sector • Australian non government bond issuance in 2002 by sector • Total A$37.5bn Source: Commonwealth Bank

6. Major developments in the Australian bond market • Special Purpose Vehicles • Public Private Partnerships • Growing retail demand for hybrid products • Commercial Mortgage Backed Securities ‘CMBS’ • US Traditional Private Placements

7. CMBS - an emerging asset class Source: Commonwealth Bank

8. US Traditional Private Placements • Lower rated and unrated Australian and New Zealand borrowers can now raise longer term capital via the US private placement market. • Capital not available domestically is now available in large volumes for 10 to 15 year maturities. • This further restricts supply from Australian investors. • Domestic banks are forming alliances with US investment banks to achieve this - CBA and Merrill Lynch is an example. • More than US$2.5bn has been raised since the start of 2002 and there is a substantial pipeline for new deals. • Issuers include: Amcor, Boral, PBL, Santos, CSL, Caltex Australia and Origin Energy, Network Ten and Contact Energy (NZ).

9. Australian borrowers benefit in global shift from equities to bonds US mutual fund flows shift from equities to government and corporate bonds Ten week average US equity and government bond mutual fund flows Ten week average US equity and corporate bond mutual fund flows $b $b inflows Source: MFMF, Commonwealth Bank

10. Increasing demand for Australian credit is creating offshore borrowing opportunities A$m Source: Bloomberg

11. Commonwealth Bank achieving volume and cost benefits by accessing offshore demand CBA Wholesale Funding as at 31 December 2002 Total A$48.9bn

12. Commonwealth Bank accessing offshore markets: issuing highlights • USD500m 5yr FRN issued June 2002: 25% placement into China • 4 Japanese ‘Uridashi’ issues for almost A$2 billion • Structured EMTN issues: 420 completed • Global Securitisation ‘Medallion’ issues: A$11billion raised

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