La Caixa returned to the market today (Tuesday) after pulling back last week, and cheaper guidance ensured good demand for a new five year benchmark. Meanwhile, Coventry Building Society is selling a seven year sterling debut inside a similar Yorkshire issue last week.

Barclays Capital, BNP Paribas, Credit Suisse, JP Morgan and La Caixa are pricing the new issue at 195bp over mid-swaps, the middle of guidance of the 195bp area, after having built a book of more than Eu1.5bn by 1145 London time.

“We had a very, very good bookbuilding session this morning,” said a syndicate official at one of the leads, “and a couple of accounts are just finalising their orders before we close books at 1230 London time.”

The issuer is understood to have been targeting a Eu1bn issue, but the banker said that the book would support a larger size. The level of 195bp over compares with 185bp mid for a February 2016 La Caixa issue, he added, which had been trading slightly tighter before the new five year was launched.

The Spanish savings bank had been expected to launch a six year cédulas hipotecarias last Tuesday, but held off, apparently waiting for market conditions to improve. Deutsche Bank and HSBC were then on the top line then while Credit Suisse and JP Morgan were not.

Some market participants said that last week they had heard a similar level of 195bp over mid-swaps being discussed for a six year maturity, meaning that initial talk for the new five year issue was at a cheaper level, given the shorter maturity. Bankers suggested that La Caixa had to be more careful on its second attempt.

“They were criticised for what happened last week and felt that they had to be more realistic this time,” said a syndicate official away from the leads. “The pushback last week was on price, not name, so they could come back again, and there were two things they could do: change the price, or change the maturity.”

Another banker away from the leads said that the level, at the 195bp area for a five year, appeared fair.

“The yield is nicely above 5%, which is good,” he added.

Bankers said that the market, which was said to be in good shape, could not account for the guidance, which was cheaper than last week.

“The market feels a bit weaker this morning on the back of what was going on in Japan overnight, but it’s nothing too bad,” said one.

However, a banker at one of La Caixa’s leads said that market conditions had not been ideal last week, although he put part of the problem to the previously envisaged six year maturity.

“You lose a lot of guys that can buy up to five years,” he said. “Spanish govvies also widened 5bp-6bp that day, and when you haven’t got overall Spain sentiment behind you that doesn’t help.”

Final distribution figures were not available as The Covered Bond Report went to press, but, unusually for a Spanish covered bond, the book was said to include “decent” Asian interest.

Today’s benchmark is the third that La Caixa has launched this year, after a Eu2bn five year at 220bp on 10 February and a Eu1.25bn four year at 200bp over on 8 March.

The last Spanish benchmark covered bond was a Eu600m four year issue for Kutxa, which was priced at 235bp over mid-swaps on 31 March.

Bankers are confident of more euro supply this week, with Helaba expected to mandate a new issue shortly.

Coventry Building Society launched an inaugural sterling benchmark this morning, a seven year issue via Barclays Capital and BNP Paribas. Initial price guidance was 145bp-150bp over Gilts.

Yorkshire Building Society sold a £750m seven year debut covered bond at 153bp over Gilts a week ago, following guidance of the 155bp area.

“Given that YBS was at 155bp and that they were not pure triple-A, plus it was the first sub-10 year sterling benchmark, it is no surprise to see Coventry coming a bit tighter,” said a syndicate official away from the leads.

A banker at one of the leads said that the Yorkshire issue had been quoted at 149bp/144bp today.

“Coventry’s at a tighter level than 153bp,” he said, “but this is triple-A/triple-A, and the issuer is better rated, too.”

The size was yet to be determined, but a £750m size was seen as likely, and pricing of 145bp over is expected.