Lloyds TSB Bank came to the market yesterday (Thursday) with a £1.25bn 15 year sterling covered bond, evading the adverse effects of a softening euro market.

Leads Goldman Sachs, Lloyds and Santander priced the deal at 195bp over Gilts, in line with initial guidance, and built a book in excess of £1.8bn.

A syndicate official at one of the leads said the ongoing interest in sterling meant the softness in the market yesterday – when Spanish government bonds widened – had a very limited impact on the execution.

“It was an incredibly successful deal, with a very low new issue premium of 5bp,” he said.

A syndicate official at another of the leads also said poorer market conditions yesterday played no role in the transaction.

“It didn’t affect it, given that we knew we had the interest,” he said. “Everyone we expected to play did so.”

The syndicate official compared the transaction with a Lloyds January 2025 at 187bp over Gilts on the bid side and another deal from the issuer, a February 2029 at 193bp over Gilts.

“Lloyds had this long dated curve, so we were able to apply where a new issue would sit and add a 5bp concession,” he said.

He added that the trade had been primarily driven by quality UK real money. He said the UK took roughly 90%, and Germany/Austria and other regions 10%. Asset managers were allocated about 40%, insurance companies 40%, banks 10%, and others 10%.