Westpac issued a Eu1.5bn dual tranche, seven and 15 year covered bond today (Thursday) that included its longest benchmark. Bank of Queensland has meanwhile established a new CPT programme and received an expected AAA rating for a Eu500m five year debut.

The new issue is Westpac’s first euro benchmark covered bond since July 2015, although its New Zealand subsidiary Westpac NZ sold a Eu1bn five year issue on 30 March. The Australian bank had been on a roadshow this week, having flagged its intention to launch a euro benchmark covered bond or senior unsecured issue.

Westpac leads BNP Paribas, Credit Suisse, Goldman Sachs and Westpac launched the seven year tranche with guidance of the 12bp over mid-swaps area this morning. The spread was later fixed at 7bp and the size at Eu1bn. The 15 year tranche was launched with guidance of the 20bp-22bp area. The spread was fixed at 17bp and the size at Eu500m.

The 15 year is Westpac’s longest benchmark covered bond, and bankers noted that such long-dated Australian issuance is rare, with most issuers typically preferring the intermediate part of the curve.

Westpac March 2022s, the issuer’s longest-dated outstanding, were seen at minus 4bp, mid, this morning.

Seeing Commonwealth Bank of Australia April 2024s at 4bp, mid, bankers said the seven year tranche offered a new issue premium of around 3bp – noting that the covered bonds of top tier Australian issuers all trade in line.

The 15 year tranche was deemed to have offered a premium of around 7bp, with bankers citing CBA February 2031s at around 8bp, mid.

“The initial guidance for both tranches was pretty generous, but for a dual tranche, longer dated Australian deal you can understand them taking a more cautious approach,” said a banker away from the leads.

Bank of Queensland has meanwhile completed the process of establishing an awaited A$3.25bn (Eu2.2bn) covered bond programme. The Australian regional bank published a prospectus dated yesterday.

Fitch today assigned an initial series of CPT mortgage-backed covered bonds an expected rating of AAA, assuming a Eu500m five year issuance. The programme is also expected to be rated Aaa by Moody’s. National Australia Bank is the arranger.

Bank of Queensland held a roadshow in September, arranged by Commerzbank and National Australia Bank, to meet investors and discuss the structure of a potential covered bond programme, after which it announced it would adopt a conditional pass-through (CPT) structure for its future issuance, becoming the first Australian issuer to do so.

A debut deal had initially been expected at around the end of 2016 or early 2017.

Bank of Queensland is rated A3/A-/A- by Moody’s, S&P and Fitch, respectively.