Westpac yesterday locked in five-year funding on terms slightly better than those obtained last week by Commonwealth Bank. Westpac said it sold A$3.1 billion in covered bonds in the domestic market, split into a $1.4 billion floating rate tranche and a $1.7 billion fixed rate tranche.The bank priced the bonds at a spread of 165 basis points over the bank bill swap rate.Westpac thus obtained the benefit of the mild rally in pricing in the secondary market on the CBA bond sold last Wednesday at 175 bps over swap.On the other hand, the pricing on the Westpac bond reinforces the drastic lift in the cost of funds over the course of the summer, a factor bound to compress bank margins in the short term.