Sterling market accommodates NAB

Ian Rogers
Novelty value helped National Australia Bank sell a covered bond denominated in sterling overnight on terms better than banks in Britain can achieve.

NAB priced the £500 million bond at 145 basis points over three-month Libor, Dow Jones reported and at the low end of price guidance. The bonds are secured over a pool of Australian-sourced loans.

The Covered Bond Report noted that Barclays sold covered bonds in sterling on Friday at a spread of 155 basis points while Nationwide Building Society sold bonds at a spread on 165 basis points on Monday.

Since making use of covered bonds as a funding option late last year major Australian banks have now sold this form of debt in US dollars, euro, Norwegian kroner, Swiss francs, Australian dollars and sterling as they catch up with wholesale funding needs.

Bank of New Zealand, a NAB subsidiary, is also marketing a covered bond issue denominated in New Zealand dollars.