Westpac is launching a five year US dollar covered bond today (Monday), only the fourth Australian US-targeted issue this year, and its second in dollars. It comes after the issuer on Friday priced a 10 year domestic, while euros was quiet this morning.

Westpac Banking Corporation’s covered bond is part of a transaction that is also featuring at least one senior unsecured tranche, with the issuer marketing a three year deal in fixed and/or floating rate format, according to a syndicate banker at one of the leads – Citi, JP Morgan, RBC, and Westpac.

The Reg S/144A transaction was prompted by reverse enquiry “on both sides of the deal”, he said, adding that a lack of US-targeted issuance should support the new issue.

The covered bond was being marketed at a price whisper of the mid to high 40s over mid-swaps, which another lead syndicate banker had met with a good response.

“We’re building a very strong order book,” he said.

Around $1bn of orders had been placed by the time of publication.

The last US dollar benchmark covered bond was a $1bn (Eu725m) long five year public sector Pfandbrief for NordLB on 29 October, with another syndicate banker noting that, besides that deal, it had been a while since there had been any non-Canadian US targeted covered bond issuance.

As a result, relative value could take a bit longer to ascertain, he said, but added that a deal in the low to mid 40s over should find demand.

A US$1.25bn five year issue for Westpac on 22 May was the last US dollar covered bond from an Australian bank before today’s transaction, with Royal Bank of Canada issuance in addition to NordLB’s deal comprising US targeted supply since then.

Westpac’s five year deal from May was priced at 35bp over mid-swaps.

Today’s deal for Westpac comes after it on Friday priced a 10 year Australian domestic covered bond issue that was launched in response to good reverse enquiry for the product and the tenor, according to a banker close to the deal, with a wide range of real money investors participating.

A A$900m (Eu626m) deal was been priced at 85bp over. Westpac was sole lead manager.