As a result, the cost of the major banks’ outstanding long-term wholesale debt is likely to have risen by about 25 basis points relative to the cash rate over the past year. The increase is smaller if fixed-rate wholesale debt is assumed to be swapped back into variable-rate obligations.
The extent of the rise in relative costs for individual banks varies according to each bank’s use of interest rate derivatives. Short-term wholesale debt is mainly priced off 1- and 3-month bank bill rates.