Bloomberg News

Commonwealth Bank Said to Plan Covered Bond Investor Talks

October 19, 2011

(Updates with legislation in third paragraph.)

Oct. 19 (Bloomberg) -- Commonwealth Bank of Australia, the nation’s biggest lender, is arranging meetings with investors as it plans its first sale of covered bonds, according to a person familiar with the matter.

BNP Paribas, Morgan Stanley and Commonwealth Bank will organize the talks in Europe and the U.S., which are expected to begin on Nov. 7, the person said, asking not to be named as the details are private. The Sydney-based lender may market a sale of covered bonds after the meetings, the person said.

Australia’s upper house Senate passed legislation on Oct. 13 that amended the nation’s Banking Act to allow domestic lenders to sell covered bonds for the first time. The nation’s banks may pay a yield premium on the securities that’s about a third less than on senior unsecured notes, David Goodman, Sydney-based Westpac Banking Corp.’s director of asset-backed securities, said this month.

The securities, which typically have the highest credit rating, are backed by assets that stay on the bank’s balance sheet and can be sold in a default.

Commonwealth Bank’s inaugural covered debt will be backed by prime Australian residential mortgages, the person said. The sale is subject to market conditions.

National Australia Bank Ltd. is also weighing a covered bond sale, a separate person familiar with the matter said yesterday. It plans to meet with investors in the U.S. and Europe from Oct. 31, the person said.

--Editors: Edward Johnson, Malcolm Scott

To contact the reporter on this story: Sarah McDonald in Sydney at smcdonald23@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net


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