Bankinter distinguished itself from its Spanish peers yesterday (Thursday) by preferring cédulas over senior unsecured, coming to market with a Eu500m no-grow three and half year deal that was more than seven times oversubscribed, according to an official at the issuer.

Covadonga Perez, head of the funding department at Bankinter, told The Covered Bond Report that the deal was very well received as some 160 accounts placed around Eu3.6bn of orders for the Eu500m deal.

Leads Bankinter, Barclays, BBVA and Société Générale revised guidance from the 245bp over mid-swaps area to the 230bp over area one hour after books were opened, and further tightened the spread to re-offer the paper at 220bp over.

The deal was priced not only through Bonos, but also some 20bp inside Bankinter’s own curve, taking into account where Bankinter October 2015 and Bankinter March 2017 bonds were trading, said Perez

Spanish investors took 32% of the deal, Germany and Austria 26%, France 12%, the UK and Ireland 11%, Nordics 7%, Portugal 3%, Asia 2%, Switzerland 2%, the Benelux 2%, US 1%, Italy 1%, and others 1%. Asset managers were allocated 60%, insurance and pension funds 23%, and banks 17%.

Perez said that the issuer had anticipated strong demand for its covered bonds as it had received positive feedback from investors during a number of roadshows it held through 2012.

“We knew investors were there,” said Perez. “As the supply of Bankinter cédulas is limited, they are usually asking for more paper.”

By hitting the market yesterday, Bankinter decided to seize an opportunity deriving from the positive outcome of government bond auctions, with Spain having sold more debt than expected in sales yesterday morning and the yield on its 10 year benchmark having fallen to 10 month lows below 5%.

“We were ready to issue,” said Perez, “but we waited to see the result of the Spanish auctions, and at that point we decided to launch the deal.”

According to Perez, Bankinter preferred to issue covered bonds rather than senior unsecured because of the strong investor demand for the cédulas, collateral availability, and the possibility of raising funding at a lower price.

The three and half year maturity was targeted keeping in mind Bankinter’s outstanding issues and to diversify their maturities, she said.

“We had a 2015 maturity and a 2017 maturity, so we decided to issue in the middle,” added Perez.

Perez said that Bankinter will probably not tap the covered bond market again soon, given that it usually issues up to one benchmark a year.