National Australia Bank is today (Wednesday) out with initial price thoughts for a 14 year fixed rate sterling benchmark covered bond, with the level matching the guidance on a new issue in that format and maturity from its Australian peer CBA last Thursday.

NAB is collecting indications of interest on the basis of initial price thoughts of the 120bp over Gilts area, via Barclays, NAB and RBC. The order books had not been opened by the time The Covered Bond Report went to press, but the transaction was said to be today’s business.

NAB last came to the sterling market in January with a £500m three year floater that came at 145bp over three months Libor and was the first sterling covered bond issue for an Australian bank.

Its latest move comes after Commonwealth Bank of Australia on Thursday became the first foreign issuer to sell a fixed rate benchmark since the sterling market was reopened in autumn 2010, pricing a £750m (Eu949m) 14 year at 118bp over Gilts on the back of £1.4bn of orders. The re-offer level on CBA’s deal was said to be the tightest new issue spread in the UK covered bond market.

A UK government Funding for Lending scheme had been expected to divert UK sterling covered bond issuance, leaving the market open for foreign issuers.