Aussie dollar covered comes of age with CBA

Commonwealth Bank of Australia has priced the first covered bond for a domestic bank in the home currency. Not only is it the largest covered bond in that currency by a considerable margin, but it is also the largest ever funding exercise undertaken by any financial institution in the local currency. The deal size sends a strong signal that these bonds are eligible for liquidity buffer purposes. Ostensibly pricing 20bp wider than its senior bonds but 45bp inside where it would fund a covered bond in euros, the spread has clearly set a new paradigm.