Australia

Australia has been the covered bond growth engine this year, adding $44bn to its market. With no redemptions due in 2013, it is set to grow faster than any other covered bond market again next year, though not at quite the same pace, bank analysts predict.

Westpac has brought its second US dollar bond of 2012 — the fifth such deal from Australian banks this year. Following a US roadshow last week, it was heavily oversubscribed and priced on Tuesday at less than half the spread of its first US deal, launched in November 2011.

National Australia Bank has returned to the euro market with a covered bond that is twice as long as its previous euro financing but at less than half the cost. Despite that, initial guidance was cheap relative to its peers. Yet the swell of demand it has attracted should ensure the final print is tighter.

A sustained spread rally drew Suncorp Metway back to the covered bond market on Thursday. The borrower had originally scheduled a second Australian dollar benchmark for 2013, but found funding conditions too attractive to ignore.

After an impressive rally in covered bond spreads, Australian banks are likely to concentrate on offshore markets for covered issuance and use RMBS to tap the domestic buyer base, the Reserve Bank of Australia’s assistant governor for financial markets said on Monday.

Sweden’s Stadshypotek priced a A$750m inaugural transaction on Friday, paying only a small premium over where it would have funded in the domestic market.

Sweden’s Stadshypotek on Thursday became only the fourth issuer to launch a benchmark Kangaroo covered bond. Despite an explosion of domestic supply this year the global appetite for Australian dollars remains strong, which bodes well for other Nordic issuers looking at inaugural trades.

New Zealand’s ANZ National launched its second ever euro benchmark on Tuesday, finding strong demand for a €750m five year deal. The jurisdiction offers an attractive pick-up over its Australian neighbour, which, together with the hunger for fresh supply, is helping raise the bid for New Zealand covered bonds, said syndicate bankers.

Australia and New Zealand Banking Group drew $4.5bn in orders for its latest financing, a dual tranche dollar covered bond, and followed competitor Commonwealth Bank of Australia in selling a senior unsecured transaction in the same sitting.

Australia and New Zealand Banking Group returned to the dollar covered bond market on Tuesday, attracting several new accounts in its first dollar deal since opening the market for Australia at the end of 2011.

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