Barclays Bank launched a sterling denominated 10 year covered bond today at 215bp-220bp over Gilts, the UK bank’s first benchmark in its home currency and the first sterling benchmark of the year.

The pricing was equivalent to around 190bp over mid-swap, which, according to one market participant, equated to around 165bp over mid-swaps in euros.

A syndicate banker at one of the leads – Barclays, Citigroup, Lloyds and Santander – played down the relevance of the equivalent swap spread in euros.

“The key relative value argument is relative to sterling senior and covered bonds for other issuers,” he said.

More than £1bn (Eu1.2bn) of orders had been gathered by the time The Covered Bond Report went to press, with guidance unchanged.

Syndicate officials away from the leads were encouraged by the deal. One said that he understood that Barclays had previously not wanted to sell a sterling deal because it could price tighter in euros relative to its UK peers than in sterling, but that it was positive to see the issuer “widening the net”.

“Books are over £1bn, which is very strong, very positive,” he said, adding that the level was attractive.

Another syndicate official away from the leads expected the transaction to go well.

“I think there is enough cash left over from December coupons and redemptions,” he said. “I also think it’s good for the market that Barclays and RBS are out there actively looking at the market, because we need different names, new maturity days, etc, injected into the sterling market.”

RBS is meeting with investors, starting today, for a possible sterling denominated covered bond.

Another syndicate official away from the leads said domestic accounts were driving Barclays’ transaction.

Barclays’ last covered bond issuance comprised two taps totalling Eu750m on 12 December. A March 2022 issue was increased by Eu300m at 130bp over mid-swaps.