ASB Bank said yesterday it had registered a prospectus in London to raise up to €7 billion ($NZ12.2 b) through a covered bond programme.

The bank said it was yet to issue any bonds under the programme.

"Feedback from offshore investors indicates that there is interest in a ASB covered bond, however timing will depend on the market and future funding requirements," said Nigel Annett, ASB's general manager, treasury.

The programme would allow for future growth in the bank's asset base, he said.

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New Zealand banks have in recent years been raising billions of dollars by issuing covered bonds, which are debt securities backed by the cash flows from a specific pool of mortgages or other loans.

They differ from standard bonds as investors have specific recourse to the assets that secure, or cover, the bonds in the event of default. Every covered bond issued by a bank effectively subordinates the claims of unsecured debt-holders, leaving fewer assets available to settle their claims in the event of a bank failure.

The Reserve Bank has limited the issue of covered bonds to up to 10 per cent of a bank's assets.