Barclays Bank this (Wednesday) morning launched only the second UK covered bond in euros this year, a Eu2bn five year benchmark that responded to investor demand for covered bonds denominated in euros from UK names, according to market participants.

A syndicate official away from the leads said Barclays had filled a void for investors.

“With the UK, everyone has been focused on sterling,” he said. “There is a huge lack of supply from UK names in euros.

“This is exactly what investors were asking for,” he added. “And, it’s Barclays, so the bank is able to set tight levels.”

Another syndicate official away from the leads agreed that there was considerable demand for UK issuers in euros.

“It was a given that it would go well,” he said.

Lloyds TSB Bank is the only UK issuer to have come to the market with a euro covered bond this year, a Eu1.25bn five year at 180bp over on 4 January.

Leads Barclays, Crédit Agricole, ING and Natixis went out with initial guidance of the 85bp over mid-swaps area for Barclays’ new issue before revising guidance to 80bp-85bp and then to 80bp over, before fixing the spread at 78bp over.

A syndicate official away from the leads said the trade was very successful and said he had expected the leads to price around 78bp over.

One syndicate official away from the leads put the new issue premium at 15bp-20bp, citing Barclays’ outstanding 2016s trading in the low 60s over and 2022s at 92bp over.

“Looks like a pretty good deal, and pretty attractive,” he said.

Another banker away from the leads put the new issue premium at 10bp versus Barclays’ 2016s, which he put at around 70bp on the bid side.

“It looked fairly aggressive against the curve,” he said, adding: “This is not a criticism, but a compliment as it highlights the strength of the covered bond market.”

A syndicate official at one of the leads put the new issue premium at 15bp, but said it was tough to judge where the outstanding bonds were trading, with quotes on shorter dated paper varying by 5bp-10bp from bank to bank.

The books were closed at 1120 CET with orders “well above Eu3bn” according to the syndicate official.

“The trade was the size we were looking for, the right starting point, the right price, and we expect good performance in the secondary market,” he said.

He added that the transaction was “the only one in sight”.

A syndicate official expected that Spanish candidates could move following a Spanish bond auction tomorrow.

“The auction should go well,” he said. “Keep in mind that Spain has funded at least 30% of its annual requirements already.

“Once the auction is out of the way, it is fairly likely we will see something, but it depends on caveats like Greece – what if something leaks out of this conference call today?”

Finance ministers cancelled a meeting that was supposed to be held today regarding approving Greece’s second bailout package, and will instead hold a conference call today, and meet on Monday.

A banker said the market had been left relatively unharmed by this development.

“The markets are largely ignoring Greece,” he said.