A Eu750m four year deal for Kutxabank on Friday attracted Eu3.8bn of orders from some 200 accounts in about half an hour, enabling pricing 20bp inside IPTs, and an official at the issuer said this broad support was the highlight of the deal for the merged savings bank.

Leads Barclays, Citi, Commerzbank, Crédit Agricole and Natixis priced the deal at 220bp over mid-swaps, tightening the spread from initial price thoughts in the 240bp over mid-swaps area.

“It was a blow-out,” said Viet Le, covered bonds and ABS syndicate manager at Crédit Agricole, “one of the quickest turnarounds so far.”

According to Le, at 220bp over mid-swaps the deal came some 40bp inside the Bonos curve.

Kutxabank was formed by the mergers of three Basque saving banks, Biscayan bank BBK, Gipuzkoa’s Kutxa, and Alava’s Caja Vital in January 2012. Le said that the deal was an impressive debut for the issuer, considering that the Eu750m issue was its first transaction since the merger.

Ignacio Martin-Muñio, head of treasury and capital markets at Kutxabank, said the issuer was highly satisfied with the transaction.

“This was our inaugural issue after the merger and we tried to reach as many investors as possible,” he told The Covered Bond Report.

Some 200 accounts participated in the transaction, according to Martin-Muñio.

“That is the best part of the deal from our point of view,” he said. “We had a highly diversified demand with more than 200 investors participating in the transaction and 80% of orders coming from international accounts.

“We are really happy with the quantity and quality of investors and we hope we can keep on working with them in the future,” he added.

Spain took 20%, the UK and Ireland 19%, Germany and Austria 18%, France 16%, the Benelux 9%, Nordics 9%, and others, including Asian and US accounts, 9%. Asset managers were allocated 53%, banks 30%, insurance companies and pension funds 10%, and others 1%.

The four year maturity was targeted taking into account the issuer’s maturity profile and investor preferences, said Martin-Muñio.

“We wanted to avoid shorter maturities and we thought that a covered bond with a maturity in the four to five year bucket was attractive to institutional investors,” he said.

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

“We really wanted to be in the market again after a difficult period for the non-core issuers,” said. Martin-Muñio.

Crédit Agricole’s Le said he expects to see more Spanish saving banks tapping the covered bond market.

“They are issuers that have not been able to come to market for the last two years as a result of the crisis, but the market is now open for them again, especially because of the strong demand for high yields and the risk-on sentiment,” he said.

Martin-Muñio said that, in general terms, he expects this year to be much better than 2012.

“We think that the spread of cédulas hipotecarias will narrow during the year,” he said, “but it is not going to be easy, and we will see several setbacks during this period.”

He added that January has been very positive for new issues and for the secondary market.

“We have to consolidate the new levels and try to avoid a significant deterioration before moving into another step of spread contraction,” he said.