Dexia Municipal Agency priced a Eu1bn five year obligations foncières benchmark well inside early whispers yesterday (Wednesday) and the issuer told The Covered Bond Report that it was pleased to be able to achieve a limited new issue premium while attracting some Eu2bn of demand from 100 accounts.

The issuer announced on Monday that it had mandated Dexia Capital Markets, ING, Morgan Stanley, Natixis and Nomura for a forthcoming issue, ahead of the release of first quarter results for the Dexia group yesterday morning.

Cécile Van De Moosdyk, group head of long term funding, Dexia, told The Covered Bond Report that there were several factors behind the decision to come to market this week.

“We do not, of course, decide on the timing alone,” she said, “we need the market to be supportive, so we monitor the market and look at whether it is the right time to issue in a particular currency. We have also been engaging in a lot of communications with investors in Europe very recently so we felt that it was the right moment in this respect, as well as in terms of market conditions.

“We were working on this transaction from the middle of last week and we decided that the right market approach would be to announce the transaction on Monday morning in order to be ready to go relatively fast if market conditions were positive after Dexia’s Q1 results were announced to the market.”

Olivier Eudes, head of Dexia’s long term funding desk in Paris, added that the lack of new issues in light of the recent long weekend was also a factor.

Having gone out with an initial whisper of the mid-90s area early yesterday morning, the leads progressively moved the guidance to 93bp-95bp, then the 93bp area. The re-offer was then fixed at 91bp.

“In terms of the final spread, we are happy with the result,” said Eudes. “We had a constructive discussion about where the right whisper should be, taking into account the secondary market and the recent transactions we have seen in the market. On this basis we took IoIs at the mid-90s. Thanks to the strong and quick feedback we saw in this project, with more than Eu1bn of demand coming in at this level, we decided quite quickly to open a book at the 93bp area.

“Seeing the flow of concrete orders coming in once more after we did this, reaching Eu2bn, we had enough flexibility to tighten the spread a little bit, and to get the right balance between the spread for the issuer and the spread for the investors. The spread to the issuer was right because we have a limited new issue premium compared with the secondary market, and the spread for the investor was right because we feel that with this kind of level and taking into account the demand we saw, we expect to see a performance on the secondary market.”

Some 100 accounts participated in the transaction and Eudes said that this included an encouraging response from investors that had been visited recently.

Germany and Austria were allocated 25% of the bonds, France 15%, the Netherlands 12%, Japan 10%, the Nordics 9%, Belgium 8%, the UK and Ireland 6%, Asia (ex-Japan) 6%, Italy 4%, Luxembourg 2%, and others 3%. Banks took 34%, funds 33%, central banks 17%, insurance companies and pension funds 13%, and corporates 3%.

Westfälische Landschaft Bodenkreditbank (WL Bank) priced a Eu1bn five year mortgage Pfandbrief at 11bp over mid-swaps yesterday afternoon, after having gone out with guidance of the 12bp area. Leads Barclays Capital, BayernLB, Deutsche Bank, DZ Bank, NordLB and WGZ Bank built a book of Eu1.6bn comprising 100 accounts for the new issue.

Germany was allocated 63%, Switzerland 7%, Asia 5%, the UK 5%, Denmark 4%, France 4%, Finland 3%, Luxembourg 2%, eastern Europe 2%, Italy 2%, Austria 2%, and the Middle East 2%. Banks took 59%, asset managers 21%, central banks 9%, funds 3%, supranationals 2%, and others 7%.

Moody’s has assigned a provisional Aaa rating to covered bonds to be issued by Société Générale SFH, operating under the new French obligations à l’habitat legislation. The French bank already issues obligations foncières through Société Générale SCF.