Westpac NZ came to the market today (Thursday) with a Eu1bn five year issue priced at 75bp over mid-swaps, after having postponed the debut transaction in February citing poor market conditions and an earthquake in New Zealand.

Pricing for the New Zealand subsidiary of Westpac came in the middle of initial guidance of the 75bp over mid-swaps area. Leads Barclays Capital, BNP Paribas and UBS opened books at 0810 London time with Eu640m in indications of interest, according to a banker away from the leads. The books were closed at 1120 London time with orders in excess of Eu1bn.

Westpac NZ rescue helicopter

Bank of New Zealand issued a Eu1bn seven year at 62bp over mid-swaps last November, which is now trading wider, at 70bp-71bp over.

“The pricing is more realistic than last time Westpac NZ tried to come and postponed,” said a banker away from the leads. “That was after the Christchurch earthquake, but I don’t think they really had a trade then.

“The bank is relatively small, even if it’s part of a bigger group, and the fact that it’s non-ECB collateral doesn’t help,” he added. “But it looks like quite a nice pick-up at 75bp over.”

Another banker had similar thoughts on the deal.

“The problem is that a lot of investors don’t sort of follow this market closely,” he said, “though I do think the pricing is very fair, even a bit generous.”

Another banker away from the leads said the deal went well.

“All in all, I think it was a good one for a new name,” he said. “It’s definitely no blow-out, but they don’t have access to the traditional sort of investors associated with Pfandbriefe, for example.

“ANZ is on roadshow,” he added, “so that will be the next one out of this region.”

He said that he expected ANZ to launch a deal next week.

Another banker away from the leads said the market was a bit quieter compared with earlier in the week.

“In general, though,” he added, “the market has been very positive for covered bonds.

“Nearly all the deals have been oversubscribed.”

This sentiment was echoed by another banker who said: “The general market doesn’t feel great but then deals are getting done, and we’ve seen a decent covered bond supply.”