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4-Traders Homepage  >  Equities  >  AUSTRALIAN SECURITIES EXCHANGE LIMITED  >  National Australia Bank Ltd.    NAB   AU000000NAB4

NATIONAL AUSTRALIA BANK LTD. (NAB)
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National Australia Bank Ltd. : NAB Sells $1.25 Billion Of Covered Bonds At Record-Low Coupon

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06/13/2012 | 12:37am CEST
   By Patrick McGee 
 

National Australia Bank Ltd. (NAB.AU) garnered the lowest yield on record for an Australian bank selling covered bonds priced in U.S. dollars on Tuesday.

The deal marks the fourth greenback-covered bond sale from an Australian bank, and the first from NAB, since legislation allowing the assets to be sold was passed last fall.

NAB, the country's fourth-largest lender by market value, sold $1.25 billion of five-year bonds with a 2% coupon, compared with a range of 2.25% to 2.45% from the prior three deals, all of which were for five-year bonds.

NAB's bonds were priced to yield 2.032%, or 1.295 percentage point over the Treasury rate. When it sold $1.25 billion of five-year unsecured bonds in March, they carried a coupon of 2.75% and were priced to yield 2.79%, or 1.90 point over Treasurys.

The much tighter spread stems from the extra protection embedded in the covered bond, which offers investors the full faith and credit of the issuer and also the added protection of a pool of mortgage assets. If NAB ever defaulted on its bonds, the stream of payments from the mortgage pool would "cover" the bondholders.

These bonds are backed 100% by Australian prime residential mortgages, earning them triple-A ratings from Moody's Investors Service and Fitch Ratings. NAB's unsecured bonds are rated Aa2 by Moody's, and AA-minus by Fitch and Standard & Poor's.

NAB Chief Executive Cameron Clyne told reporters last month that NAB was planning to issue more covered bonds because the recent flare-up in Europe was hurting international debt markets.

"None of these issued in Europe are helpful to our funding profile," he told reporters May 10, following the bank's earnings report. "If we do see an elevated period of concern...we can start to use some more of our covered bond capacity."

Since December, NAB has sold covered bonds on 12 occasions, including in euros, British pounds, Norwegian kroner and New Zealand dollars, according to data from Dealogic. The lowest fixed-rate coupon among them was a 2.375% bonds priced in New Zealand dollars.

Tuesday's deal pushes year-to-date issuance in the U.S. dollar covered bond market to $26.15 billion, according to Dealogic. Last year's record issuance was just less than $40 billion.

The last covered bond to price in the U.S. was a $2 billion, 2.25% coupon, five-year deal from Barclays. It priced at 2.352%, or 1.53 points over Treasurys.

Write to Patrick McGee at [email protected]

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Financials ( AUD)
Sales 2018 18 274 M
EBIT 2018 9 038 M
Net income 2018 5 854 M
Debt 2018 -
Yield 2018 7,16%
P/E ratio 2018 12,58
P/E ratio 2019 11,42
Capi. / Sales 2018 4,12x
Capi. / Sales 2019 3,99x
Capitalization 75 262 M
Chart NATIONAL AUSTRALIA BANK LT
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Mean consensus OUTPERFORM
Number of Analysts 14
Average target price 31,0  AUD
Spread / Average Target 12%
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Managers
NameTitle
Andrew Gregory Thorburn Group CEO, MD & Executive Director
Kenneth Ross Henry Chairman
Anthony J. Cahill Chief Operating Officer
Patrick C. Wright Chief Technology & Operations Officer
Gary A. Lennon Chief Financial Officer
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