Spreads have tightened on Commonwealth Bank's jumbo A$3.5 billion domestic covered bonds since they were sold in the middle of last week.CBA had defied the forecast made here last week, which was that banks would take a judicious approach to covered bond issuance and switch to unsecured bonds.Instead, CBA was prepared to pay to get a large volume of bonds away. Indeed, it was the largest bond issue yet undertaken in the domestic corporate bond market. (The previous record volume, of $2.6 billion, was held by ANZ and set in January 2009.) CBA set the credit spread on the new covered bond (split into fixed and floating rate tranches) at 175 basis points over swap, with the same spread on each tranche.  This spread was only 15 bps above the 160 bps secondary market pricing of the banks' five year unsecured bonds, noted on banks' bond rate sheets the week before, and led to an immediate repricing of these bonds to a spread of in excess of 200 bps.To give some context to the pricing trends of last week, credit spreads on five-year government guaranteed bonds issued in the domestic market (and sold mainly in early 2009) peaked at 190 bps, and this included the guarantee fee.One piece of good news coming out of all this is that the re-pricing of the bonds issued by the major banks did not hold. By the end of the week, credit spreads in secondary markets on the CBA covered bonds had narrowed to 156 bps on the fixed rate tranche and 165 bps on the floating rate tranche.Similarly, the indicative spread for five-year unsecured bank bonds had narrowed to around 190 bps.This may help Westpac, which on Friday said it was marketing a domestic covered bond issue. Westpac is also reported to have mandated a euro-denominated issue as well.On the other hand, Bank of New Zealand, a subsidiary of National Australia Bank, backed away from a planned New Zealand dollar issue of covered bonds in the middle of last week.Reuters reported that the bonds were being marketed in a range of 125 bps to 130 bps over mid-swaps. This compares with secondary market pricing of 94 bps over swap on BNZ's November 2017 euro-denominated covered bonds.Investor feedback was that the issue volume was too small and that the recent Aussie issues were seen as a problem.BNZ consoled itself with a NZ$225 million, six-year domestic covered bond issue instead.     Elsewhere in the bank bond market, Suncorp Metway announced a buyback of its April 2012 government guaranteed bonds. No price details are known, but Suncorp could be kicking itself that it made the announcement ahead of CBA's covered bond issue.As it was, Suncorp announced on Friday afternoon that it had bought back $990 million of the $1.27 billion of bonds that were outstanding.