Suncorp launched its first 10 year covered bond on Monday in response to investor demand, according to the Australian issuer’s head of funding, also taking the strategic opportunity to lengthen its maturity profile while the covered bond market presented a more attractive option than RMBS.

The deal is Suncorp’s first covered bond with a maturity of longer than five years.

“The 10 year maturity was chosen as a response to investor demand as well as a strategic opportunity to lengthen our maturity profile beyond what we and our regional peers have issued,” Simon Lewis, head of funding at Suncorp, told The CBR.

Suncorp-Metway’s new issue is its second covered bond of the year, following a A$500m five year floating rate note on 15 June.

Suncorp had suggested after its covered bond issue in June that its next benchmark deal would be an Australian dollar RMBS issue. However, that the issuer opted for a covered bond after market conditions presented a good opportunity, said Lewis.

“The deal doesn’t represent a change in plans, rather the recognition of an excellent strategic opportunity for the bank,” he added. “Suncorp continues to monitor all funding markets across our various debt programmes, including RMBS, and will respond to opportunities as they are presented.”

Suncorp leads ANZ, Deutsche, NAB and UBS launched the new 10 year fixed rate covered bond issue on Monday with initial price thoughts of the 140bp over swaps area, for a minimum size of A$100m. The guidance was later on Monday revised to 135bp-140bp on the back of books in excess of A$350m, before the spread was yesterday (Tuesday) fixed at 135bp and the size at A$350m on the back of orders approaching A$450m.

“This is a great outcome for Suncorp and we are pleased with the uptake of this issue,” said Lewis. “The bonds were taken up by 28 investors, with bids totalling in excess of A$400m.”