CaixaBank yesterday (Wednesday) met with more than Eu2.7bn of demand for a Eu1bn five year cédulas benchmark that a funding official at the issuer described as “a big success”, with spread rather than deal size the focus.

Barclays Capital, CaixaBank, Crédit Agricole, JP Morgan and UBS priced the deal at 248bp over mid-swaps, around 12bp tighter than initial guidance of the 260bp over area, which was subsequently revised to the 250bp over area.

The pricing represented a spread of 8bp over Bonos, according to the issuer, with more than Eu2.7bn of orders placed and 121 investors participating.

Bruce Cairnduff, head of financial institutions and covered bond syndicate at Crédit Agricole, said that demand exceeded expectations, with very strong support from domestic and international accounts.

“This demonstrates the strength of the name, extending the maturity parameters for cédulas transactions in the current liquidity window and issuing at such a tight spread relative to the underlying government curve,” he said.

CaixaBank is the fourth Spanish issuer to tap the benchmark covered bond market in a week, with the deals typically involving the leads tightening primary pricing by at least 10bp.

“I think it reflects how much dislocation there is between primary cédulas market and the secondary cédulas market at the moment,” said Cairnduff. “It is not a deliberate part of the execution process, but a reflection of the strength of the order books, and the limited capacity for large deal size.”

A funding official at CaixaBank told The Covered Bond Report that the transaction demonstrates the bank’s ability to access the public capital markets, with covered bonds representing the best product available to the issuer to do so.

“The transaction was a big success, and we are really happy to have achieved our objectives,” he said.

He said that CaixaBank is in a very comfortable liquidity position, which at the end of December amounted to Eu20.9bn, around 8% of total assets. The bank has around Eu2.4bn of wholesale funding to redeem in 2012, and what it said is the lowest 2012 financing requirement among its European peers.

CaixaBank’s five year deal represents the longest dated cédulas benchmark since the market reopened, and the funding official said that the maturity was chosen because it fit with the issuer’s maturity profile.

“We manage the concentration of maturities in different years, for example having planned in advance to try to avoid big redemptions in 2012,” he said. “Obviously it’s much easier to issue in three years, but it doesn’t make sense for us to issue debt maturating before 2017-2018.”

He said that the issuer was targeting a tight spread over a large deal size.

“Our objective was to make a five year deal at the right time with the right price, rather than big volume,” he said. “The idea was to create momentum and gain traction by starting with the 260bp over area and go tighter if possible. We hit this target.”

Orders reached around Eu1.7bn within around one-and-a-half hours, at which stage the issuer and the leads decided to announce a Eu1bn deal size and revised guidance of the 250bp over area “just to have some flexibility to go tighter”, according to the CaixaBank official.

“The demand continued to grow up to Eu2.7bn, when we decided to close the book and price at 248bp,” he said.

The issuer said in a statement that the deal was well received by leading domestic and international investors, with standout demand coming from the Asian market, particularly China.

The majority (64%) of the issue was placed with international investors, with the issuer highlighting demand from France (22%), Germany (15%), United Kingdom (9%), and Asia and other countries (18%).