Westpac sold its first public sterling covered bond today (Tuesday), a £500m five year fixed rate issue that attracted over £550m of orders and was priced at the same spread as the last sterling offering from Australia, showing that there is still life in the market despite the summer lull.

Westpac leads HSBC, Lloyds, Nomura and Westpac launched the June 2022 fixed rate issue this morning with initial price thoughts of the 70bp area over the 4% March 2022 Gilt.

Guidance was later set at the 68bp area on the back of books in excess of £500m excluding joint lead manager interest. The spread was then fixed at 67bp with the books having closed at over £550m excluding JLM interest, before the size was set at £500m (Eu559m, A$823m).

The final spread matches that of the only other sterling-denominated public covered bond from an Australian issuer to be sold this year, a £350m December 2021 fixed rate issue for Commonwealth Bank of Australia priced at 67bp over Gilts in January.

“To price flat to that marker is a pretty good result for a debut,” said a syndicate banker away from the leads.

The new issue is the biggest sterling covered bond from Australia since February 2016, when ANZ sold a £500m three year FRN.

“Today’s deal is encouraging, especially as £550m is quite healthy demand for the time of year,” said another syndicate banker away from the leads. “It shows that while euros are quiet, life goes on in other markets.

“I think we could see more opportunistic deals like this.”

Canadian Imperial Bank of Commerce reopened the sterling covered bond market on 10 July after almost two months without public supply with a £525m five year fixed rate bond. Compatriot Bank of Montreal followed the next day with a £800m three year FRN.

The new issue is Westpac’s third public covered bond offering this year, following a Eu1.5bn dual tranche, seven and 15 year deal on 11 May and a A$2bn dual tranche long five year, fixed and floating rate deal on 24 May. The Australian bank has previously issued sterling debt in the senior unsecured market.