Suncorp has been watching with interest recent euro-denominated covered bond issues from other Australian and New Zealand banks, according to its head of funding, who said the issuer “should certainly be investigating” future issuance in the currency, following a A$500m FRN last week.

Australia’s Suncorp-Metway sold its first covered bond in May 2012, a A$1.6bn dual tranche deal, and has since only issued benchmarks denominated in in its domestic currency, having last come to the market in October 2014 to sell a A$950m dual tranche issue.

The issuer then on 9 June announced a mandate for a five year Australian dollar-denominated covered bond, eventually printing a A$500m (Eu332m) no-grow floating rate note on Wednesday of last week (15 June).

Simon Lewis, head of funding at Suncorp, said the issuer had decided to return to the market as it has a A$1.1bn covered bond maturing in December.

“We felt it would be a good time before our 30 June balance date to issue a smaller A$500m transaction and thus avoid a large funding obligation in the middle of the US elections,” he told The CBR. “This is why we communicated clearly to the market that this trade would be capped at A$500m and would not grow.

“This then allows us to roll the maturity off in December without the need to reissue in Australian dollars potentially before our next fixed rate maturity in November 2017.”

Leads ANZ, Deutsche, NAB and UBS priced the new issue at 110bp over three month BBSW, from initial guidance of 105bp-110bp. The book was last reported at over A$500m.

“Pricing was at the wide end of our initial range of between 105bp-110bps, but that was in line with our thoughts of fair value given the three sessions prior to the trade were quite volatile,” said Lewis. “We were also delayed by one day given the public holiday in Sydney and Melbourne, which wasn’t helpful, but by and large trade met all our volume and price expectations.”

Lewis said that the transaction was well received during a period of uncertainty ahead of the UK referendum on its EU membership today (Thursday).

Some 30 investors participated in the deal, Lewis said, with fund managers allocated 60%, financial institutions 35%, and other accounts 5%. Almost the entire trade was taken by Australian accounts, with Asian and European accounts not represented in significant size, he added.

Lewis said that Suncorp’s next transaction is planned to be an Australian dollar RMBS issue, following the publication of its annual results in August.

“We did, however, watch with much interest the euro covered bonds issued by other Australian and NZ banks this year,” he added, “and think that this is a market Suncorp should certainly be investigating for future issuance.”

Australia’s Macquarie Bank sold an inaugural, Eu500m five year covered bond in February, while New Zealand issuers ASB Finance and BNZ International Funding returned to the market with rare euro benchmarks on 5 April and 10 June, respectively.