Banco Comercial Português is buying back Eu918.65m of covered bonds, more than double an initially targeted amount, following a high participation rate of some 30% by investors in a tender offer that closed on Friday.

The Portuguese bank offered cash for three covered bonds: Eu1bn 3.75% October 2016, Eu1.5bn 4.75% June 2017, and Eu1bn 4.75% October 2014 issues.

It initially set a target buyback amount of Eu400m across the issues, but increased this to Eu918.65m to repurchase all notes tendered by investors.

Excluding Eu400m of the targeted bonds held by the issuer, this represents a take-up rate of some 30%, matching the level of participation in a Caixa Geral de Depósitos tender offer that closed a week before BCP’s. The 30% acceptance rate is the second highest for any cash for covered bond tender offer launched this year, topped only by 42% for National Bank of Greece.

Market participants away from the BCP tender offer previously said that CGD’s buyback augured well for BCP’s, and that they expected a similar level of participation.

Deutsche Bank, JP Morgan and Millennium bcp were joint dealer managers on BCP’s tender offer.

A banker involved in the transaction said that the issuer decided to take advantage of a slightly better than expected result and repurchase more than the initial target amount.

BCP had already in its initial announcement said that it could buy back more than Eu400m of the bonds.

The banker attributed the positive outcome to the offer of an attractive premium, without which investors holding covered bonds would have otherwise prefered to wait until their maturity given the safe nature of the asset class.

The Portuguese bank set a cash repurchase price of 90% for Eu1bn 3.75% October 2016 and Eu1.5bn 4.75% June 2017 notes, and the banker said that this represented “a clear value incentive” of around 8 points.

Excluding the amount of bonds held by the issuer, around 45% of the October 2016 issue was tendered and 34% of the June 2017 notes, compared with a 13% of the 2014 covered bonds, for which the banker said a premium of around one point was offered (based on a cash repurchase price of 92%).

“When you compare the two results it’s quite clear what is driving participation,” he said.

RBS analysts said the premiums on offer in BCP’s tender offer were of up to 20% over pre-announcement secondary market prices.

Florian Eichert, senior covered bond analyst at Crédit Agricole, said that the CGD tender offer results had already hinted at a high acceptance rate for the BCP tender and this has been confirmed.

He attributed the BCP results to a combination of attractive premiums, uncertainty surrounding Portugal, and low ratings, with asset managers and also some pension funds and insurance companies generally not able to hold covered bonds rated below investment grade.

BCP’s mortgage covered bonds are rated Baa3, on review for downgrade, by Moody’s, BBB- by Fitch, and A (low) by DBRS.

The banker on the transaction noted that the 2016 and 2017 bonds are longer dated than some of the issues targeted by other tender offers and that the results show that with an attractive premium investors are happy to take “a bit of a haircut” rather than wait to maturity.

He played down the significance of the BCP tender offer results as reflection of concerns about Portuguese risk, saying that this would hold more true if the bonds in question were hybrid or perpetual securities.

“I wouldn’t draw too many conclusions in terms of sovereign risk or bank risk,” he said. “It’s more a case of an attractive value proposition”.

He added that volatility was greater at the time of a Banco BPI tender offer, with the Greek situation less settled then than now. Banco BPI achieved a hit rate of just below 8% for a tender offer that closed in February.