NAB became the first Australian bank to tap the 12 year maturity yesterday (Wednesday), sizing a Eu750m deal in line with its maximum capacity and pricing flat to OATs and close to secondaries, which a lead banker said explained queries about the deal.

National Australia Bank, Victor Harbor

The deal was National Australia Bank’s first euro benchmark covered bond appearance of the year, and was priced at the 33bp over mid-swaps, the tight end of guidance of 33bp-35bp over, via Barclays, BNP Paribas, Commerzbank and NAB.

More than Eu900m of orders were placed for the transaction, which is the longest dated euro benchmark covered bond for an Australian bank, and 40 accounts participated.

Views on the strength of the outcome were mixed among syndicate officials away from the deal, with some saying that 40 investors is a low count for a credit like NAB and that distribution of 43% and 40% to France and Germany, respectively, made for concentrated investor participation.

A syndicate banker on NAB’s deal acknowledged suggestions that the order book could have been larger, but said that the issuer had made it clear from the outset that its maximum capacity was Eu750m.

“Maybe the ‘benchmark’ language confused a few competitors,” he said. “Nonetheless I think it is a fantastic result, given the nature of the deal, being the first 12 year trade from down under, flat to OATs and coming with a circa 2bp new issue concession.”

A syndicate banker away from the deal also defended the transaction, saying it was a “decent outcome”.

“The pricing is pretty aggressive, so my assumption is that price and not size was the focus,” he said. “It’s not a disrespectable size and it came flat to or with a small spread over OATs.”

The investor base for 10 year plus maturities is typically smaller than for the belly of the curve in any case, he added, and in the prevailing low rate environment ticket sizes are smaller, too.

France took 43%, Germany 40%, the UK 11%, the Netherlands 4%, and others 2%. Investment managers were allocated 45%, banks 35%, insurance companies 19%, and others 1%.