After an initial burst of covered bond issuance in the domestic market between January and March last year, the major banks have not returned, but they have persisted with covered bond issuance in international markets. Yet, this issuance remains very expensive.CBA was the first to issue covered bonds in the domestic market. It paid 175 basis points over swap/bank bills to issue five-year covered bonds in January 2012.ANZ was the last to issue and paid a considerably lower 95 bps over swap/bank bills to sell four-year covered bonds in March.CBA issued five-year covered bonds in the Euromarket in January 2012 at a swapped back cost of 220 bps over. And, over the course of the year, three of the four major banks issued more than A$6 billion of covered bonds, each in international markets.ANZ was the exception, issuing only A$4.5 billion.This year ANZ, CBA and Westpac have each issued more than A$2 billion of covered bonds, but NAB only released its first issue last week, raising €750 million for 12 years.Credit spreads have come down in international markets but the cost of covered bond issuance remains high.Westpac swapped back a seven year euro-denominated issue at around 90 bps over in early April. It is estimated that NAB's swapped back cost of funds last week would be around 105 bps over.Yet, in the domestic market, NAB sold five-year unsecured bonds at just 78 bps over the week before last. At these levels, 10-year issuance would price at around 100 bps over.  The major banks seem to be paying a steep price to obtain longer terms to maturity in international markets.As for National Australia Bank's most recent covered bond issue, the deal was originally sized at €500 million and priced at 33 bps over mid-swaps against an order book of €900 million.It is being reported as the longest dated euro-denominated covered bond from an Australian bank. This is true in terms of benchmark-sized issuance but not true in an outright sense.Both NAB and CBA sold small euro-denominated covered bonds with a 15-year term to maturity in January 2012. CBA sold a 17-year bond as well.