Kutxabank launched a Eu750m no-grow four year deal today (Friday) that attracted over Eu3.5bn of orders mainly from international investors, just a day after BBVA hit the market with a Eu1bn 10 year deal that the issuer said was the longest dated benchmark cédulas issue since 2007.

Kutxabank’s deal is the first benchmark covered bond from Spain’s savings bank sector in this year’s reopening of the cédulas market.

Leads Barclays, Citi, Commerzbank, Crédit Agricole and Natixis set initial price thoughts at the 240bp over mid-swaps area and tightened the spread to 220bp over. The book comprised over 200 accounts, according to a syndicate official at one of the leads.

He said that the deal was priced in the context of trades from “second tier” Spanish names this year – Bankinter, Popular and Sabadell – but that Kutxa is a higher quality credit and better rated.

A syndicate banker at another of the leads said the transaction was “fantastic”, and attracted an impressive amount of international demand. He added that this was due to a prevailing risk-on sentiment in the market, but also in part to ongoing marketing undertaken by the issuer.

“Kutxabank is now well known among international investors,” he said. “They had made an effort to reach out to them, so we were sure there was strong appetite for their cédulas.”

He said that leads decided to announce the deal yesterday (Thursday) and to go to market today in order to give the issuer even more visibility. The lead syndicate banker added that deal went well despite the recent large amount of supply from Spain.

Kutxabank’s deal is the fifth euro benchmark covered bond issued by a Spanish bank since the reopening of the sector by Bankinter on 10 January, and came after BBVA launched a Eu1bn 10 year deal yesterday (Thursday) afternoon that attracted Eu3bn of orders an one hour and half.

Erik Schotkamp, capital and funding management director at BBVA, said that the transaction was the first 10 year issue by a Spanish bank since 2007 and represented “another clear sign of the growing confidence on global names like BBVA”.

BBVA was also the first peripheral issuer to access the debt market this year when it launched a Eu1.5bn senior unsecured bond on 3 January that attracted Eu5.5bn of orders.

BBVA’s covered bond came after Banco Popular Español launched a Eu500m six year issue on 14 January, which an official at the issuer said at the time was the longest dated Spanish issue since March 2010 and marked a significant step for the cédulas market in terms of maturity extension.

As with Banco Popular, BBVA’s deal was launched late in the morning on the back of the positive outcome of some Spanish government bond auctions, said a syndicate banker at one of the leads

“The market backdrop was very favourable, so our view was that there was no need to wait,” he said.

Some 165 accounts participated in the transaction, with the issuer emphasising high demand from foreign investors.

“The interest from investors outside Spain speaks for itself, with 85% of demand coming from foreign investors and more than a third from Germany,” said Schotkamp.

BBVA’s deal was priced at 215bp over mid-swaps, following guidance of the 230bp area, by leads Barclays, BBVA, Citi, Crédit Agricole and Credit Suisse.

However, in spite of the multiple levels of oversubscription achieved by Spanish banks, one market participant cautioned against over-exuberance.

“How long will the peripheral madness last?” he asked.

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