Spain’s Bankinter priced its first new benchmark covered bond in over a year yesterday (Monday) after carefully monitoring the market for several weeks to find the “perfect point” for a five year cédulas, with a Eu1bn deal a positive surprise, according to a syndicate official at one of the leads.

Bankinter priced the Eu1bn five year cédulas hipotecarias issue at 268bp over mid-swaps after Bankinter, Barclays Capital, Crédit Agricole and Nomura built an order book of Eu1.4bn. The re-offer spread represented a tightening from initial guidance of the 275bp over area, which was revised to the 270bp over area during bookbuilding. The bonds are said to have traded 5bp tighter this (Tuesday) morning.

The deal came nearly three weeks after a Eu500m two year Bankia deal brought to an end a wave of cédulas supply in February that began in the three year maturity. Bankinter’s issuance plans also dated back to around the same time.

“We had been looking at a deal for around three to four weeks,” said Lorenz Altenburg, head of covered bond syndicate at Nomura, “but because five years is a much tougher maturity than three years, the timing had to be more careful.

“Five years is more strategic and involved a lot more monitoring of the market.”

The only other five year deal from a second tier Spanish issuer this year was a Eu1bn CaixaBank issue on 8 February, with Banesto a day before that having sold a Eu500m four year transaction and other Spanish banks, including national champion Banco Santander, opting for three year or shorter dated deals.

Altenburg said that Bankinter and its leads took a closer look at the market at the beginning of last week, and again on Friday after the results of the Greek PSI (private sector involvement) scheme were announced.

This, in combination with the International Swaps & Derivatives Association (ISDA) determining that the restructuring of Greece’s debt constituted a credit event and would therefore trigger CDS payouts, helped lift market sentiment and pave the way for Bankinter to launch its deal.

Altenburg said underlying market conditions were relatively strong, and that this helped the leads to “probably expect a positive surprise” in terms of the deal size, but that although they expected to be able to size a Eu500m deal, a Eu1bn transaction was “not a given”.

“The deal involved a fair amount of gauging how firm the market was to pick the perfect point,” he said. “I think there was good communication with the issuer, and that this helped us to pick that perfect point in terms of the timing.”

With no outstanding Bankinter cédulas beyond the 2014 maturity, pricing was informed by secondary levels of paper such as Banco Popular Español 2016s and 2018s, according to Altenburg. These were trading at around 280bp/240bp and 300bp/250bp over mid-swaps, he said.

Spain took 33% of the bonds, the UK 16%, Germany 13%, France 11%, European central banks 11%, Asia 9%, Austria 2%, Italy 2%, and the Netherlands 2%. Banks were allocated 40%, funds 30%, central banks 15.5%, and insurance companies 13.5%.