Australia

OTP Mortgage Bank on Thursday launched the first euro covered bond from Hungary since November 2011, uncovering enough demand to increase a short dated floating rated trade. Meanwhile, National Australia Bank’s recent 14 year sterling offering has widened in the secondary market, after demand proved lacklustre for its attempted long end benchmark.

Another milestone was set in the development of the sterling covered bond market this week when Commonwealth Bank of Australia became the first foreign issuer to price an ultra-long dated covered bond — and only the second non-domestic borrower to issue in sterling

Commonwealth Bank of Australia has become the second Australian bank to issue a sterling covered bond and the first to issue in the long end. On Thursday it mandated joint leads RBS, Royal Bank of Canada and itself for the benchmark, which is due to be priced shortly.

The stressed cover pool losses of Australia’s covered bonds are worse than those in core Europe, Moody’s first performance overview of the jurisdiction revealed on Tuesday. However, Australia still boasts highly rated issuers and impressive collateral scores.

The Australian regulator has set out its prudential standards for covered bonds, making some concessions to industry lobbying.

Australia’s Westpac returned to the dollar market this week, launching a dual tranche three year trade on Tuesday, which it priced with zero new issue premium, according to syndicate bankers off the deal.

Bayerische Landesbank (Bayern LB) launched its first euro benchmark covered bond in over a year on Wednesday, bringing a 10 year public sector backed Pfandbrief originally mandated in July 2011. The trade prioritised pricing over size and received less interest than recent German deals. At the less traditional end of the covered spectrum, Nykredit Realkredit opened books on a tap of a recently issued junior covered bond.

The senior market took centre stage again on Tuesday, dissuading covered issuers from competing with another trio of unsecured trades after Westpac’s slow bookbuild on Monday. The Australian issuer closed the spread gap with its Nordic peers, but found demand lacklustre compared with earlier Australian benchmarks.

Australia’s Westpac Banking Corp returned to the euro market to launch the jurisdiction’s first seven year covered bond on Monday. But a trio of competing senior unsecured trades contributed to a slow book build, said syndicate bankers, with some also suggesting guidance had been set too tight.

New Zealand’s ASB Finance plans to bring annual euro benchmark covered bonds following its successful debut this week. Although happy with the outcome on its first deal, the issuer told The Cover that ASB’s sound fundamentals and the advent of domestic legislation should help tighten spreads for follow-on deals.

Caisse de Refinancement de l’Habitat launched the largest French covered bond in months when it tapped a 12 year trade for an impressive €750m on Wednesday. But despite evident domestic demand, follow on trades are likely to have to wait until after the Greek elections.

Suncorp Bank could turn to the euro market for its next covered bond trade after launching an inaugural deal in Australian dollars this week. Meanwhile, both tranches of Clydesdale Bank’s domestic debut were trading tighter on Friday morning. But though the borrower said it will be a repeat issuer in the covered market, the euro basis swap will consign it to sterling for the time being.