ING Bank was satisfied to find Eu3.5bn of demand from over 150 accounts for an eight year Dutch regulated covered bond yesterday (Monday) given the tightening in spreads over recent months and its choice of an uncommon maturity, according to an official at the issuer.

Leads BNP Paribas, Deutsche Bank, ING and UniCredit priced the benchmark at 43bp over mid-swaps after having gone out with initial price thoughts of the 45bp over mid-swaps area.

“The talk was based on the issuer’s outstanding January 2020 securities quoted at mid-swaps plus 42bp and was offering very limited new issue premium,” said Achim Linsenmaier, head of covered bond syndicate at Deutsche Bank. “The trade was met by very strong investor interest.

“Books grew quickly throughout the morning, allowing the issuer to tighten guidance to mid-swaps plus 43bp-45bp within an hour of the initial announcement.”

When the order books were closed orders totalled Eu3.5bn with demand from 157 accounts.

“Given the very high quality of orders and very limited price sensitivity, the transaction was upsized to Eu2bn and the price tightened to mid-swaps plus 43bp,” said Linsenmaier.

The deal came after UniCredit had last Tuesday reopened the benchmark euro covered bond market after a three week break and amid a busy senior unsecured market.

“We have done a lot of senior already this year but only one covered bond, back in January,” Martin Nijboer, head of long term funding at ING, told The Covered Bond Report. “And after a period of almost no issuance, it’s nice to be back in the market with a successful transaction.

“This year there has not really been a summer break as we have seen all this issuance. Take UniCredit, for example – it was perhaps only Eu750m, but at 100bp through govvies, which is quite an achievement and shows how good the market is.”

The deal came with spreads on covered bonds having tightened sharply over the past several months to be among the tightest prints this year, according to a syndicate official at one of the leads.

“Given the tightening in the market,” said Nijboer, “you don’t know if all the investors will still be interested in a new issue at a relatively tight spread, and we were also coming with an unusual eight year maturity.

“But the level of demand shows that many of them are comfortable with that. And with a Eu3.5bn book and pricing at the tight end of the range, we can only be satisfied.”

The deal also tightened 2bp in secondary trading yesterday, according to the lead syndicate official.

Nijboer said that the eight year maturity was chosen to fit in with the maturity profile of the bank’s covered bond programme, with it having nothing outstanding in the second or third quarters of 2020.

“We try to keep quite a smooth profile without any huge peaks of redemptions in any half year,” he said, “to keep the programme efficient from a collateral point of view and to make sure the bonds perform as well in the secondary market.”

German accounts were allocated 40% of the issue, France 20%, the Nordics 13%, the UK 12%, Switzerland 6%, the Benelux 4%, southern Europe 3%, and others 2%. Fund managers took 38%, banks 32%, insurance companies and pension funds 17%, central banks 8%, private banks 3%, and others 2%.