A Eu1.25bn five year issue for OP Mortgage Bank priced yesterday (Wednesday) was an “excellent” transaction, according to an official at the issuer, while bankers highlighted how the new issue had come flat to through secondary levels.

Leads Barclays, BNP Paribas, Deutsche Bank, HSBC and Pohjola priced the deal at 32bp over mid-swaps, the tight end of guidance of the 35bp over area, on the back of Eu3.5bn of orders. The bonds were this (Thursday) morning said to have performed by 2bp.

Syndicate officials had yesterday variously put the re-offer spread at flat to inside secondary market levels, with one noting that the deal had “redefined new issue premiums from flat to minus”.

A lead syndicate official said that secondary market levels for outstanding 2016 and 2018 issues indicated that fair value for a five year would be 36bp-37bp, but that pricing for Nordic covered bonds suggested a tighter spread. At 32bp over the deal was priced with a negative new issue premium and also came very close to Nordea Bank Finland July 2017s, which were around 30bp over, according to the syndicate banker.

“It was really a great success,” he said. “It was a great result for the issuer and will hopefully pave the way for further supply.”

Lauri Iloniemi, managing director of OP Mortgage Bank, said the transaction was excellent, as demonstrated by a large and good quality order book.

“The pricing was to our liking, too”, he said.

The deal demonstrates in part a flight to quality, he added, with investors attracted to a triple-A issue from a triple-A country.

“Investors are buying, but they are very choosy,” he said.

He put the re-offer spread slightly inside secondary market levels, based on an interpolated curve between the issuer’s 2016s and 2018s, and said that the deal had driven tighter its secondary market curve.

The general market backdrop has been a difficult one for syndicates and issuers to judge in recent weeks, but Iloniemi said that the issuer had roadshowed fairly extensively, with feedback from investors indicating that there is demand for good quality names despite wider market uncertainty.

And although OP’s deal was yesterday morning launched into a market that Iloniemi said “at first glance did not look that promising” the tone rapidly improved – slightly.

“We were not worried about going ahead,” he said.

Deal execution took into account today (Thursday) being a public holiday in many parts of Europe and protests in Frankfurt (“Bloccupy”), according to the lead syndicate official, with the deal announced on Tuesday afternoon to give investors time to prepare and allow for swift execution. The announcement met with a good level of interest, with potential order sizes being indicated despite the leads at this stage not taking indications of interest, according to the syndicate banker.

Yesterday morning the leads opted to communicate initial price thoughts of the mid to high 30s before setting guidance at the 35bp over area, knowing that pricing would be inside this, he added.

Germany and Austria took 42%, the Nordics 22%, the UK/Ireland 10%, Switzerland 8%, France 6%, the Benelux 6%, and others 6%. Banks were allocated 37%, fund managers 36%, central banks/official institutions 12%, insurance companies and pension funds 10%, corporate 2%, and others 3%. [Updated to include statistics]