Erste Group Bank priced a Eu750m seven year Austrian Pfandbrief yesterday (Tuesday), raising the most funding it was able to given the size of its cover pool, despite a difficult maturity, an official at the issuer told The Covered Bond Report.

The bank was one of four issuers in the market yesterday morning, but the size of its transaction was capped at Eu750m, with a minimum of Eu500m, while the other three issuers sold deals ranging from Eu1.5bn-Eu2bn.

Renée Bauer, head of long term funding at Erste Group Bank, said that the size of its transaction was capped on account of the size of its cover pool, which yesterday’s issue had exhausted for benchmark covered bond purposes.

“We have now raised around Eu5.3bn of funding this year, of which Eu2.5bn was done on the benchmark markets,” she said. “In covered bonds our focus will be on private placements as the cover pool is topped up.”

The issuer sold a Eu1bn 10 year benchmark covered bond at 72bp over mid-swaps on 13 January, and has also tapped the senior unsecured market this year.

Leads BNP Paribas, Erste Group, HSBC, Raiffeisen Bank International and UBS built an order book of more than Eu840m, and priced the issue at 55bp over mid-swaps, in line with guidance of the 55bp over area.

The issuer decided at short notice to tap the market after having observed a series of successful deals last week, and felt that a 10bp new issue premium was appropriate, said Bauer.

“We are very satisfied with the transaction,” she said. “Seven years is a difficult maturity, but it fits with our liability redemption profile.”

She said that the transaction compared favourably with previous covered bond benchmarks sold by the bank in that there was a greater take-up by non-German speaking accounts, which she attributed to intensive investor work aimed at diversifying its investor base.

Eighty investors were in the final order book, with Germany taking 35%, Austria 25%, France 14%, the UK 8%, the Benelux 7%, Asia 7%, Switzerland 3%, and others 1%.

Banks were allocated 43%, fund managers 30%, central banks and official institutions 15%, and insurance companies and pension funds 12%.