Despite improving credit markets, Australia's banks are in no hurry for the government's wholesale funding guarantee to be wound back anytime soon, and say an exit strategy can only be implemented on an internationally coordinated basis.

Since its introduction in October, domestic banks have been heavy users of the sovereign backstop, raising more than A$100 billion in local and offshore markets, behind only volumes raised by U.S. and U.K. banks.

The recent improvement in market sentiment has prompted a flurry of non-guaranteed issuance, but bank funding managers say this far from signals the guarantee has passed its shelf ...