Bank of Queensland is set to launch its first benchmark covered bond tomorrow (Tuesday), having today announced a mandate for a Eu500m five year CPT issue that is expected to offer a pick-up over Australian soft bullets. Kommunalkredit is on track to sell a Eu300m social covered bond later in the week.

The Australian regional bank was on the road last week, introducing its newly established conditional pass-through (CPT) covered bond programme, and this morning announced a mandate for a Eu500m no-grow debut.

A syndicate banker at one of leads BNP Paribas, Commerzbank, ING, National Australia Bank and UBS said the deal will be launched tomorrow, subject to market conditions.

The deal will the first Australian covered bond with a CPT structure, and the lead syndicate banker said it is therefore likely to offer a premium over outstanding Australian covered bonds, also owing to the issuer’s smaller size and the deal’s debut nature.

“Of course, investors need to do some relative value analysis looking at the soft bullet Australian outstandings,” he said. “You would expect there to be some pick-up – how much this pick-up will be depends on the discussions we have today and overnight.

“Of course, it is also a different story to sell Bank of Queensland than Westpac or CBA, so there is a matter of scaling the size, and you have to consider knowledge of the issuer or availability of credit lines as well.”

The leads saw March 2021-May 2022 paper from established Australian and New Zealand issuers trading between minus 1bp, mid, and 8bp. They also cited Dutch CPT covered bonds as comparables, seeing NIBC April 2022s at minus 1bp, mid, and 2023s for Aegon and Van Lanschot at 1bp.

Kommunalkredit Austria is expected to sell its Eu300m social covered bond via Commerzbank, Deutsche Bank, ING and RBI later this week, having completed a roadshow last Thursday.

“We’re still in the aftermath of the roadshow, but there has been good progress,” said a banker at one of the leads.