A £500m no-grow four year FRN for Yorkshire Building Society on Friday is said to have gone well despite the deal being in an untested maturity for the sterling floating rate note market.

Leads Credit Suisse, HSBC and RBC built a book of £800m with 44 accounts for Yorkshire’s covered bond, which followed a roadshow at the end of February.

A syndicate official at one of the leads said the deal had gone very well, with a comfortable level of oversubscription.

He compared the initial guidance of the 180bp over three month Libor area – later refined to 175bp-180bp over before the spread was fixed at 175bp – to a Coventry Building Society April 2018 trading at around 145bp on the mid.

“If you look at the 2018s fixed for fixed, there’s a 25bp-30bp differential between Coventry and Yorkshire,” he said. “That is much less pronounced than the shorter dated, so we worked on a basis of 15bp-20bp differential to Coventry.”

Yorkshire’s covered bonds are rated Aa2 by Moody’s, while Coventry’s are Aaa.

He added that sterling was always going to be the issuer’s preference.

“Printing euros to satisfy investors is something that they would look at as a more opportunistic or strategic trade, just given the absolute swap costs, etc.,” he said.

He said the four year maturity had fit Yorkshire’s balance sheet best given that it had an April 2018 outstanding in sterling.

It also made sense given that three year supply had performed well this year, he said.

“I think initially some of the conversations we had around the four year were that investors were willing to buy it but they were not absolutely certain about who else would buy a four year,” he said, noting the trade had been a success.

Another lead syndicate official also said four years was not a tried and tested maturity in the FRN sterling market, but said the deal had gone well.

“There’s all this three year supply out there, especially with the LTRO,” he said. “There could be some pressure on the market in three years’ time.

“This has opened the market up the four year market,” he said.

The UK took 85%, Switzerland 9%, Nordics 4%, and others 2%. Fund managers were allocated 51%, bank treasuries 40%, and private banking 9%.