A recent resurgence in covered bond issuance by Australian financial institutions provides evidence of deteriorating market conditions. The four major banks have continued issuing covered bonds since the first issues were made in November last year. But the initial rush of issuance lasted only until early March, with there being just a trickle of issuance more recently. Suncorp flagged the possibility of changing conditions with its A$1.6 billion covered bond debut on May 30. The next day, ANZ sold HK$400 million of three-year covered bonds. The floating-rate bonds were priced at 85 basis points over Libor.On Tuesday, ING Bank Australia told an Australian Securitisation Forum seminar in London that it was planning a domestic covered bond issue, after being encouraged by Suncorp's success. Issuance denominated in euros, British pounds and US dollars may follow, ING Direct officials said.On the same day, National Australia Bank sold US$1.25 billion in covered bonds on the US s144A market. The five-year bonds were priced to yield 2.032 per cent per annum or 129.5 bps over US Treasury bonds.Some early commentary has focused on the two per cent coupon that NAB will pay on the bonds, but the proceeds would swap back into Australian dollars at about 150 bps over bank bills. This puts NAB's cost of covered bond debt in line with what Suncorp paid in the domestic market less than two weeks ago.