Spreads on these covered bonds have tightened significantly since the first transaction in late 2011, reflecting not only the general improvement in global risk sentiment, but also increased familiarity with the product and a widening investor pool. Australian covered bonds now price at a level close to much longer established covered bond programs (Graph 4).
BIS central bankers’ speeches  3  Graph 4  Graph 5  4  BIS central bankers’ speeches  The general decline in borrowing costs in the second half of 2012 has helped entice a number of issuers back to the wholesale market, with volumes picking up across all markets towards the end of last year and into the first quarter of 2013 (Graph 5).