Bank of New Zealand sold the first Australasian-covered bond in Europe on Wednesday night, only the second-ever such bond sold by a bank.BNZ announced it sold €1 billion of covered bonds with a term of seven years, pricing it at a spread of 0.61 per cent over euro mid-swap. The yield works out to around 3.15 per cent.In June, BNZ made the first ever covered bond sale by a bank in New Zealand, when it raised NZ$425 million via five-year and seven-year bonds.BNZ said it received strong demand for the issue, which prompted it to up the issue size. Covered bonds are not feasible in Australia because of the Banking Act, but New Zealand's central bank is keen to see this type of funding develop so banks can diversify their stable funding sources.By next month, the Reserve Bank of New Zealand will issue a formal limit on covered bond issuances. It has already indicated, in a consultation document, that the limit would be set at a "conservative" 10 per cent.