ABN Amro was swamped with orders when it took advantage of pent-up demand to this (Tuesday) morning launch the first Dutch benchmark covered bond since January, with a lead banker giving the issuer credit for not “following the crowd” and waiting until September.

ABN Amro, Barclays, BNP Paribas, HSBC and RBS gathered more than Eu4bn of orders for the seven year deal, according to a lead syndicate official, and have fixed the spread at 52bp over mid-swaps, the tight end of guidance of the 55bp over area that in turn followed initial price thoughts of the high 50s. The size had not been fixed by the time The Covered Bond Report went to press.

The deal is the first Dutch benchmark covered bond since ABN Amro came to market in January with a Eu1bn 10 year that was re-offered at 120bp over mid-swaps. A syndicate banker away from the leads said he saw ABN Amro’s January 2022s at 58bp over yesterday (Monday), with today’s deal coming flat to 2bp over the secondary market curve.

A lead syndicate official said the 52bp over level was “a couple” of basis points back of the curve. The level of demand for the deal was not surprising, he added.

“The massive move tighter in secondary market spreads meant we knew there is pent-up demand,” he said, “with lack of supply being the problem. No-one is willing to short anything and everyone is asking for offers.”

Covered bond market conditions are very strong, he added, with ABN Amro deserving credit to take advantage of them.

“The issuer should get credit for moving before the masses,” he said. “Most issuers plan for post-summer, but ABN should get credit for not following the crowd.”

Syndicate officials away from the deal said they were somewhat surprised by the transaction, with one pointing out that this was not a negative comment.

“I don’t know if they’re taking the view that the market will get worse,” he added.

Another wondered whether the issuer was motivated to launch a deal at this time by a combination of there being an opportunity to raise funding at historically tight levels and the knowledge that markets may be challenging come the autumn, noting that these are important factors despite issuers tending to be well funded.

He said the size of the order book was not a surprise given that there is a lot of pent-up demand for Dutch paper, and that this overrode any negative impact of Moody’s yesterday changing the outlook from stable to negative on the Netherlands’ and three other Aaa-rated European sovereigns.