ING launched the first Dutch benchmark covered bond of the year today (Wednesday), a Eu1.25bn 10 year deal that a lead syndicate banker said hugged the issuer’s curve and met with a strong response, with the new issue more than twice subscribed.

ING’s deal is first Dutch benchmark covered bond since the issuer sold a $1.5bn 10 year deal at the end of November. A Eu1bn five year issue for SNS Bank on 23 August was the last Dutch euro benchmark covered bond, with ING having last visited its home market on 20 August, with a Eu2bn eight year.

On today’s ING issue leads BNP Paribas, Commerzbank, HSBC and ING gathered more than Eu2.5bn of orders from over 120 accounts. They size a Eu1.25bn 10 year deal at 26bp over mid-swaps, which represents the tight end of guidance of the 28bp over area, after initial price thoughts of the 30bp over area.

A lead syndicate banker said the transaction went very well, meeting with good demand although there was a little bit of price sensitivity. At 26bp over the deal is coming flat to marginally back of secondaries, he said.

Some syndicate bankers away from the leads said the level was fine, with one saying he had shown 28bp over and that the deal followed a significant back-up in yields. Another said that the imbalance between supply and demand in the market – net supply stands at some Eu40bn, according to analysts – means that issuers can pretty much do as they please.

But another said the deal was cheap, seeing it as coming with a new issue concession of 2bp-3bp that he said was unnecessary in the context of an undersupplied market and given the large order book.

He put ABN Amro September 2022s and ING January 2022s at around 23bp over bid, adding that the curve is fairly flat going out to 10 years.

“I think they could have printed tighter,” he said. “In this market I don’t think you need to pay that kind of new issue premium for a 10 year. I don’t see the logic of starting at 30bp.”

Another said that starting with a spread offering a pick-up to secondaries and then tightening the level has been a typical execution approach in the market this year.