Guarantee Fees and Credit Spreads

In reply to Mr MARSHALL (Dunstan—Leader of the Opposition) (17 July 2014). (Estimates Committee B)

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business): I have been advised:

None of the $11 million difference is the result of the ratings downgrade. The difference mainly arose because in 2011-12, one agency was factoring an increase in the guarantee fee to 1.5 per cent per annum but the fee was kept at 1 per cent per annum.

Interest rate spreads are influenced by many factors which can vary at different points in time. The fluctuation in spreads of SAFA relative to other government issuers using five-year maturities is shown in the following table. A date of 30 June 2011 is used to show the spreads (basis points) prior to the rating downgrade and 30 June 2014 is used to show the spreads currently.