The covered bond programmes of all New Zealand’s issuers are now registered with the Reserve Bank of New Zealand after four were registered today (Friday), paving the way for the banks to issue, with Fitch noting that the legislative backing will expand the pool of eligible investors.

The programmes of ANZ Bank New Zealand, ASB Bank, Bank of New Zealand and Kiwibank entered Reserve Bank of New Zealand’s (RBNZ’s) registry today. The last time any of these banks issued in the euro benchmark market was October 2013, when ASB Bank sold a Eu500m five year, priced at 25bp over.

Westpac New Zealand became the first of the New Zealand issuers to have a covered bond programme registered with Reserve Bank of New Zealand, on 4 April. Following its registration, on 17 June Westpac NZ issued a Eu750m five year covered bond at 20bp over mid-swaps. According to one of the leads, the deal drew Eu1.4bn of demand.

Jim Reardon, treasurer at Westpac New Zealand, said that the issuer had deliberately abstained from tapping the benchmark covered bond market for some time as investor engagement over the past year had led it to believe that it would meet with a better response if it waited to issue under the legislation.

According to Fitch, the new legislation – which came into force in December 2013 – places New Zealand issuers on an equal footing with other jurisdictions operating under legal frameworks (see previous article). The legislation has widened the investor pool for New Zealand covered bonds, said Fitch, which noted that some investors had previously been precluded from investing due to programmes not being governed by a legislative framework.

Fitch said a 2013 year-end investor survey it conducted had indicated that there would be robust international demand, particularly from Europe, for New Zealand covered bonds, with 23% of respondents expressing an intention to raise their holdings.

A syndicate official at one of the leads on Westpac NZ’s deal said that it was difficult to say whether the covered bond legislation had made a pricing difference, but he suggested it was likely to have done, based on investor feedback and the order book size. At least 81% of the issue was distributed to European investors.