We have been suspicious of the true cost of wholesale debt funding for the major banks for a couple of months now. To date, the banks have done a very good job of keeping the market guessing, with strategic debt issuance being undertaken in both the domestic and international markets. This strategic issuance has resulted in the banks being able to raise funds at margins much lower than current market conditions and their credit default swap spreads would suggest. It seems that National Australia Bank may have finally let the cat out of the bag on Monday night.NAB raised €1.25 billion for ten years at 123 basis points over mid-swaps. The euro-Australian dollar basis swap for ten years was about 54 bps yesterday but other on-costs could take the Australian dollar swapped-back price to around 200 bps. With NAB's ten-year CDS spread closing at 143 bps on the day, according to Markit, a ten-year bond spread of around 200 bps sounds about right, given current market conditions and the differentials observed in the third and fourth quarters of last year. However, we note that some market sources had the spread as wide as 210 bps to 220 bps, yesterday. Now it is entirely possible that these funds will not be brought back to Australia and will be used in the bank's operations in Britain but, nevertheless, the pricing of the issue still provides a good indication of the true cost of wholesale debt for the major banks at the present time.