National Australia Bank priced its inaugural domestic covered bond today (Tuesday), a A$750m (Eu488m) 10 year issue that was mainly bought by Australian and Asian investors and offered a new issue premium in the low single digits, said a lead syndicate official.

National Australia Bank, Victor Harbor

The deal was priced at 80bp over mid-swaps, in line with guidance of the 80bp over area, on the back of more than A$800m of orders, according to the syndicate banker. NAB was the sole lead.

At 80bp over, the deal offered a new issue premium in the low single digits, said the lead syndicate official.

The last Australian domestic covered bond was a A$900m 10 year issue for Westpac Banking Corporation, which was priced at 85bp over in November 2013. ANZ Banking Group sold a A$700m 10 year at 100bp over in early August.

The 80bp over re-offer spread on NAB’s deal equates to 25bp over mid-swaps in euros, according to the lead syndicate banker, noting that this represents a spread some 8bp tighter than where the issuer would fund in euros.

“The domestic market is cheaper than offshore funding,” he said.

NAB’s A$750m 10 year covered bonds are quoted 1bp-2bp tighter since pricing, he added.