Westpac reopened the US dollar covered bond market with a $800m three year 144A FRN yesterday (Tuesday) after receiving reverse enquiries for non-US and non-European paper, according to the leads, who found sufficient demand to enlarge the deal from a $750m minimum.

The deal is the first sizeable covered bond in euros or US dollars since a Eu500m seven year from HSH Nordbank on 22 June and the first in US dollars since a DNB Boligkreditt $1.25bn six year on 20 May.

Leads HSBC and RBC priced the $800m (Eu727m, A$1.07bn) three year 144A FRN at 30bp over 3 month Libor, in line with initial price thoughts, upsizing the deal from the $750m minimum size. The final order book size was not disclosed by the leads.

“It went very well and we were very pleased to reopen that market,” said a syndicate official at one of the leads.

“The choice of a floating rate note and a defensive tenor is indicative of the fact that times are relatively challenging, but this was a very pleasing transaction, especially in terms of the pricing level, and a very swift in and out execution on what was still a relatively choppy day.”

The deal offered no new issue premium, the lead syndicate official said, noting that 30bp over was flat to a Westpac May 2018 fixed rate issue.

Adding that the transaction was launched after Westpac received reverse enquiries from a number of investors looking for non-US and non-European paper, the lead syndicate official said the deal could encourage other issuers to tap the dollar market.

“Other markets are clearly more challenging at present, and the fact that dollars does look open this week is certainly something that issuers should be looking at,” he said. “How many are motivated to print at the moment is another question, but there is a window here, particularly considering we might be in the eye of the storm right now and next week might look more volatile when the noise around Greece increases again.”

Another banker at one of the leads agreed, suggesting that the depth of the dollar market would look attractive to non-Eurozone issuers and even Eurozone issuers.

“It is also a smoother window over the summer period than Europe historically has been,” he added, “and both those things roll up into a lower execution risk in the dollar market, therefore I would suggest it is quite sensible for issuers to be looking at it.”

The banker said the pricing of the new issue was equivalent to 3bp through mid-swaps in euros, noting that ANZ September 2018s – a Eu1bn issue – were at 7bp through mid-swaps, mid.

“On that basis it is good funding relative to the European market,” he added. “It was a sensible trade, they didn’t have to pay up for it, and it was a good deal to get done while the euro market remains in a holding pattern waiting for the Greek saga to develop.”

However, a syndicate official away from the leads said the result was unlikely to be encouraging enough to persuade other issuers to follow Westpac’s lead.

“In this market, any deal is a good deal, but compared to what we’ve seen before this is not the most stellar result,” he said.

The syndicate official said that he was not aware of any issuers looking to launch new covered bond issues this week.

“To European issuers I would still recommend looking at the euro market, with an eye on a defensive maturity,” he added. “The dollar market suits the Aussies, but for the euro guys, euros still make sense.”