Australia’s ANZ took a defensive option when approaching the market yesterday (Thursday), opting for a covered bond after having also considered senior unsecured issuance, and choosing a four year maturity, with an attractive level generating sufficient demand for it to raise EUR1.25bn.

The issuer had on 31 October announced that it would hold investor meetings last week with a view to issuing an intermediate tenor Reg S euro benchmark in senior and/or covered bond format.

Yesterday it opted for the latter, in a week in which covered bonds’ reliability in volatile markets has been cited.

“ANZ seemed to want to play it safe,” said one analyst, “as reflected in the four year maturity of the bond and an attractive spread.”

The deal is the first straight four year benchmark this year, with two long four years having been issued, and only two shorter dated euro benchmarks have been sold in 2018.

Leads ANZ, Commerzbank, HSBC and SG went out with initial price thoughts of mid-swaps plus the 15bp area for the four year euro benchmark yesterday morning, and after book updates of over EUR750m and then over EUR1.25bn, excluding joint lead manager interest, revised guidance to the 13bp area, plus or minus 1bp will price in range. A EUR1.25bn deal at 13bp was ultimately executed on the back of some EUR1.5bn of demand, pre-reconciliation and excluding JLM interest.

A syndicate banker away from the leads said the deal was another to play into the repricing of the market, noting that compatriot CBA paid 5bp over mid-swaps for a five year deal in April that was the last euro benchmark from an Australian issuer.

“They paid a significant NIP, but in line with what has been paid recently by French issuers and all in all it was a good deal,” he added. “They achieved smooth execution at these levels, where covered bonds are becoming very attractive and historical buyers are returning to the market.”

ANZ’s last benchmark covered bond was a EUR750m seven year in November 2016.

Liberbank and UniCredit Bank Austria completed covered bond investor meetings this week, with a view to potential follow-up issues. The Spanish issuer finished a roadshow ahead of a planned inaugural euro benchmark cédulas hipotecarias in an intermediate maturity – mandated to BBVA, Commerzbank, Crédit Agricole and UBS – while UniCredit Bank Austria updated investors on its covered bond programme, with a potential capital market transaction to follow – its last euro benchmark covered bond was in 2015.