Intesa Sanpaolo was in the market today (Thursday) with a Eu1bn no-grow seven year covered bond that will be priced at the tight end of guidance and some 45bp through BTPs, after the Italian bank met with a strong response for what is only the second OBG of the year.

Leads Banca IMI, Crédit Agricole, Commerzbank, RBS and UniCredit gathered more than Eu3.5bn of orders (before order books were reconciled) on the basis of guidance of the 250bp over mid-swaps area, which was tightened from initial price thoughts of the 255bp over area. The deal will be priced at 245bp over.

This is 45bp tighter than the 290bp over mid-swaps at which UniCredit on 14 August re-offered a Eu750m long five year issue that reopened the obbligazioni bancarie garantite (OBG) market and was the first benchmark covered bond ever to price clearly through the sovereign curve – around 100bp through.

A lead syndicate official said that Intesa’s deal was coming at around 45bp through BTPs.

The transaction is the eighth benchmark covered bond this week, with seven priced over the course of a hectic two days of issuance across the capital markets at the beginning of a week, which also featured a Eu1.25bn four year senior unsecured deal for Intesa on Monday.

Covered bond issuance took a break yesterday (Wednesday) as market participants focussed on the outcome of a ruling on the European Stability Mechanism by Germany’s constitutional court.

The timing of Intesa’s deal today was considered slightly surprising as many market participants are attending the second day of an industry gathering in Munich, but a syndicate banker away from the deal said that market conditions were strong so it made sense to take advantage of this rather than wait. He said the deal appears to have achieved a spread inside secondary market levels and “well inside BTPs à la UniCredit”.

“No doubt there would have been some inflation in the book as it was a Eu1bn no-grow,” he added, “but it looks like a great result.”