CaixaBank launched a Eu1bn no-grow five year cédulas today (Tuesday) that met with considerable investor demand, according to syndicate bankers away from the leads, in the first peripheral covered bond benchmark since the Italian elections.

CaixaBank headquarters, Barcelona

Leads BNP Paribas, CaixaBank, Citigroup, Deutsche Bank and Société Générale went out with initial price thoughts in the 220bp over mid-swaps area, guidance at 215bp-210bp over, and tightened the spread to a re-offer of 210bp.

The order book reached Eu2.7bn, according to a syndicate banker away from the leads. He said that such large investor interest was probably related to the high amount of liquidity in the market and the attractive yield offered by CaixaBank.

“They tightened the pricing from 220bp to 210bp, but I’m sure they did not lose a single account in the process as there is so much cash in the market,” he said.

Another syndicate banker away from the leads noted that initial price thoughts at 220bp were already 35bp through Bonos, and he expected the deal to perform very well.

He said that such tight pricing versus Spanish government bonds was a positive result for CaixaBank as the issuer is not among the strongest Spanish names.

CaixaBank’s last covered bond deal was in February 2012, when the Spanish issuer launched a Eu1bn five year issue that was priced at 248bp over mid-swaps, or 8bp over Bonos.

A syndicate banker away from the leads noted that CaixaBank was one of the few Spanish issuers that did not come to market at the beginning of the year, when lenders such as Bankinter, Banco Sabadell, Banco Popular Español, BBVA, Kutxabank and Santander tapped the covered bond market, most of them after a long absence.

The most recent Spanish deal before the Italian election results was a Bankinter Eu500m five year trade that attracted a modest Eu600m of demand on 24 January. Last Tuesday (5 March) BBVA sold the first post-Italian election peripheral bank benchmark, issuing a Eu1.5bn three year senior unsecured bond.

A syndicate banker away from the leads said it was somewhat surprising to see a Spanish issuer tapping the market today given the uncertainties over peripheral issuance after the Italian elections results, but said that the deal was well timed considering the limited supply of the past month or so, which contributed to the positive outcome of the deal.

Another syndicate banker also said that the deal was well timed considering that the Spanish government bonds had performed well in the past weeks in comparison to Italian government bonds.