ANZ is in the market with the first Australian covered bond, a five year US dollar issue understood to be being marketed at a level of 115bp over mid-swaps or slightly tighter. CBA has mandated a euro deal with a likely five year maturity, with investors being given time to prepare lines.

The inaugural issue emerged after what one syndicate banker described as a “frenzy” of discussions in the US dollar market about potential Australian deals, with others agreeing that there had been little apparent coordination between the country’s banks and that this could have caused problems. NAB and Westpac are understood to be eyeing dollar covered bonds in addition to ANZ.

Bookrunners ANZ, Citigroup, Nomura and UBS, with joint leads HSBC and Morgan Stanley, are said to have opened order books on ANZ’s deal early this morning London time.

The 115bp over area compares with a re-offer spread of 72bp over for a $1.4bn five year National Bank of Canada issue from 12 October, which was the last five year dollar covered bond.

A syndicate official away from the leads said the approach of nominating leads with and without books was similar to the way a corporate issuer would structure its leads.

He had the impression that the deal had not picked up much interest from Europe or Asia yet. But, he added, that was to be expected given that most interest would come out of the US.

“There is still some European interest,” he said. “They obviously wanted to make sure they could get those in before the US guys got involved.

“It’s an interesting strategy, though I would have probably opened in the morning in New York.”

He said the pricing was fair and comparable to Nordic levels.

Commonwealth Bank of Australia has mandated BNP Paribas, HSBC and RBS to work alongside it on a euro covered bond, with a five year maturity understood to be likely.

A syndicate banker at one of the leads said that investors were carrying out credit work in order to establish credit lines and that a deal could be launched this week if market conditions allow and investors finished their preparations.

A European fund manager said that he would first look at New Zealand covered bonds and then UK supply to inform his pricing expectations for Australian issuance in euros, and that he would price Australian covered bonds wide of the Nordics because of differences between the legislative frameworks and cover pools.

He emphasised that his firm expects a commitment from Australia’s issuers to regularly issue in euros, coming with a Eu1bn plus deal at least once a year, and for them to follow through on this commitment, unlike Canadian covered bond issuers, who have been absent from euros since their first deals.