National Australia Bank is poised to sell a five year dollar benchmark covered bond to provide a welcome boost to US targeted supply that is lagging previous years’ volumes, with only two dollar deals having been priced so far this year.

Bank of America Merrill Lynch, Barclays, HSBC, NAB and RBC have the mandate, and are said to be considering marketing the deal at the mid-40s over mid-swaps.

A syndicate official away from the leads said this would be the right starting point taken into account that the issuer has a June 2017 dollar issue outstanding that is trading in the mid to high 30s over. He said that he expects the deal to be priced between 40bp and 43bp over mid-swaps.

NAB’s last benchmark covered bond was a Eu1bn 10 year in early December. It raised $1.5bn of covered bond funding in September via a $1.25bn tap of a 2017 fixed rate issue and a new, $250m five year floating rate note. The original 2017 issue was NAB’s dollar debut, a $1.25bn five year re-offered at 100bp over mid-swaps in June.

US targeted benchmark covered bond supply has been limited this year, with only Commonwealth Bank of Australia and Korea Housing Finance Corporation having tapped the market. CBA sold a $2bn three year at 32bp over mid-swaps on 9 January, while KHFC sold a $500m no-grow five-and-a-half year issue on Tuesday, at 100bp over Treasuries.