Australia

Covered bonds from Australia and New Zealand have varying levels of exposure to the property cycle, according to latest Moody’s research. Even if prices were to fall, there are safeguards to moderate the impact, it said.

After roadshowing nearly four months ago, New Zealand’s ASB Bank finally took the plunge and opened books for a €500m five year deal on Thursday. Despite a high rating and fair spread, the deal competed head on with Banca Carige (see other story) and found only a tepid investor response. At the same time, Canadian Imperial Bank of Commerce opened books for a long three year denominated in Aussie dollars.

ANZ New Zealand and Kommunalkredit Austria are poised to price €500m five year covered bonds. Both deals have gone without a hitch, with oversubscriptions from a broad range of investors. However, given the lacklustre performance of other recent deals, leads were cautious on pricing and offered attractive spreads.

ANZ Bank’s €1bn five year, priced on Tuesday at 17bp over mid-swaps, was placed with around 50 accounts after leads built a €1.15bn book.

ANZ Bank launched a five year euro benchmark on Tuesday, despite a weak market backdrop, only a few weeks after it tapped the Aussie dollar market with a 10 year covered bond.

Australia and New Zealand Bank (ANZ) issued a A$700m 10 year covered bond overnight on Thursday, in the longest ever maturing deal in that currency. Large parts of the Asian market were on holiday but the deal attracted far greater interest than had been expected and priced at tighter levels than could have been achieved in euros

Not content with pricing the first regulated Canadian covered bond in euros and the first regulated benchmark in US dollars, the Royal Bank of Canada is now marketing its first Australian dollar covered bond benchmark.

National Australia Bank returned to the covered bond market on Wednesday to issue the longest dated euro covered bond deal from an Australian issuer. The €750m 12 year is expected to appeal to yield hungry insurance funds with its generous spread pick up to existing long dated Australian deals.

Westpac became the third issuer in less than a week, and the 10th this year, to tap the US dollar covered bond market. After mandating joint leads for a $1.25bn transaction on Wednesday the deal was priced at the tight end of guidance at 35bp over mid-swaps, which was the tightest five year print in dollars so far this year.

Australia and New Zealand Banking Group slipped in a successful euro benchmark covered bond on Thursday morning ahead of the European Central Bank’s rates decision. The borrower returned to euros for the first time in over a year and closed the tightest covered bond yet from an Australian issuer.

Münchener Hypothekenbank opened books on a £200m three year floating rate deal on Wednesday morning, becoming the latest borrower to take advantage of a starved sterling investor base.

Westpac has returned to the euro covered bond market for the first time since last July, mandating leads for another seven year. It follows trades from BNP Paribas and HSBC where demand was fuelled by central bank statements, that bankers said had exacerbated a short squeeze, causing investors to give up new issue premiums to get current coupon exposure.