National Australia Bank (NAB) is set to launch the first euro benchmark from Australia in more than two years early next week, after the announcement today (Friday) of a seven or eight year trade. Oberbank yesterday sold the first Austrian green covered bond, a €250m 10 year.

The last euro benchmark covered bond from Australia was a €500m (A$787m) five year conditional pass-through issue from Bank of Queensland in June 2019. NAB’s last euro benchmark was a €1.25bn seven year deal in January 2019, although subsidiary Bank of New Zealand sold a €850m seven year issue as recently as the week before last, on 8 June.

BNZ’s seven year issue was priced at 12bp over mid-swaps, while a syndicate banker away from NAB’s leads saw the Australian’s 2026 paper in the context of 5bp-6bp.

BNP Paribas, Deutsche, HSBC and NAB have the mandate for the new issue.

Oberbank issued the first Austrian green covered bond yesterday (Thursday), a €250m 10 year. Leads Crédit Agricole, DekaBank, Erste and RBI priced the new issue at 7bp over mid-swaps, following guidance of the 9bp area, on the back of some €340m of orders.

A syndicate banker at one of the leads said this was a good result for the sub-benchmark, with compatriot Hypo Noe having on Wednesday of last week (16 June) priced a €500m 10 year public sector covered bond at 5bp.

“Sub-benchmarks have a smaller audience,” he said. “The green feature really helped, because we had some demand from green portfolios and at the end of the day, if we had not had this demand, I’m not sure we would have tightened the spread so much and got such a positive outcome.”

Oberbank’s mandate was announced the day after Hypo Noe’s trade, on Thursday of last week, allowing for two days of investor calls on Monday and Tuesday. The lead banker said that with the market then busy with SSA supply and Caffil and KHFC benchmarks on Wednesday, it was prudent to wait a further day to launch yesterday, particularly given that it was a sub-benchmark.

The mandate had been announced as being for a seven to 10 year transaction and the lead banker said that on the margin investor feedback showed more interest in the longer maturity – but added that this would not necessarily be the case for other transactions.