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Sydney harbour birdseye
Summary

The purpose of this review is to propose a new approach to estimating the cost of debt based on the RBA’s estimates of credit spreads and consult with our stakeholders on the proposed approach. On 19 December 2013, the RBA published a method for estimating aggregate credit spreads of Australian non-financial corporations (NFCs) across maturities ranging from 1 to 10 years. The Bank also announced that it would commence publishing the estimated credit spreads monthly from December 2013. In our final report on the Review of WACC Methodology, which we released prior to the RBA releasing its aggregated credit spreads, we indicated our preference for adopting the RBA’s series of credit spreads in our WACC estimation.

Key contact
Mike Smart
02 9113 7728