A Caisse de Refinancement de l’Habitat Eu2bn 10 year covered bond issued yesterday (Tuesday) came with a high new issue premium, but succeeded in drawing high foreign participation, according to an official at the issuer.

Henry Raymond, chairman and chief executive officer at CRH, told The Covered Bond Report that the issuer chose to come to the market yesterday to catch yesterday’s flow.

Leads Crédit Agricole, Deutsche Bank, HSBC, Landesbank Baden-Württemberg, Natixis and Société Générale priced the transaction at 160bp over mid-swaps, in the middle of initial guidance.

Raymond said the spread was very high – too high for his liking – but noted that CRH’s last transaction, a Eu850m tap of a January 2022 issue on 30 November, was priced at 150bp over and that swap rates had fallen 20bp since then.

“For printing such an amount, it was useful to pay that spread,” he said of yesterday’s transaction. “We are probably supplying good performance for investors.”

A syndicate official away from the leads said CRH set the tone in pricing with its deal in paying a 20bp new issue premium, “thus probably spoiling the party for some of its French peers who might need to follow suit”.

Crédit Agricole Home Loan SFH was in the market this (Wednesday) morning with a 10 year obligations à l’habitat issue that is being priced at 165bp over mid-swaps.

Three-quarters of CRH’s transaction was bought by international investors, with Germany and Austria taking 53%, France 28%, the UK 7%, southern Europe 5%, the Benelux 3%, and others 4%.

Raymond credited the strong German participation to “a lot of roadshows held in Germany, and a pick-up versus spread of Pfandbriefe”.

He added that only buy and hold investors bought the trade. Insurance companies were allocated 40%, asset managers 24%, banks 22%, central banks 11%, pension funds 1%, and others 2%.

The ECB covered bond purchase programme participated in the buying of the bond, but Raymond said it would have been possible to do a large transaction without the help of the ECB.

“It was nice to add the programme, but it was not necessary,” he said.

CRH chose a 10 year maturity because of the importance of supplying long term funding to the French banking system, said Raymond.

“We ask a lot of the French banks,” he said, “so it’s fair to pay them back by supplying long term funding.

“We are trying to get funding for them, because we understand it’s necessary for them to have access to several means of funding.”

More than 110 investors participated in the trade.

CRH’s transaction offered 50bp more than a 10 year ING issue also launched yesterday (see separate article), at 110bp. Raymond said that he could not explain the difference in pricing.

“If you look at the market, it is moving all the time,” he said. “It’s fashionable to be reluctant to credit some countries.

“But then ING is different from us and the market has to find its equilibrium.”