Credito Emiliano has provided the first benchmark covered bond supply since deals faced challenging execution last Thursday, and will today (Tuesday) price a Eu500m seven year OBG that syndicate bankers away from the leads found encouraging.

Credito Emiliano head office

The deal follows a protracted roadshow for the bank and extends Italian access to the benchmark covered bond market beyond the national champions for the first time in more than two years — the last Italian bank besides Intesa Sanpaolo or UniCredit to have tapped the market was Credito Emiliano itself, in June 2011. At the time it sold a Eu500m three year obbligazioni bancarie garantite (OBG) issue at 140bp over mid-swaps.

For today’s deal leads Barclays, ING, Natixis, RBS and Société Générale went out with guidance of the 185bp over area, after initial price thoughts of the 190bp over area, and will price a Eu500m no-grow deal at 180bp over. Some Eu1.6bn of orders were placed for the bonds.

Credito Emiliano’s transaction comes after deals for Crédit Mutuel Arkéa, CRH and Münchener Hyp on Thursday showed the latest environment to be challenging, with syndicate officials away from today’s deal encouraged by its outcome.

“They’re paying the price that’s probably required but getting a very solid and very convincing deal,” said one. “Going out to seven years for a name like that is not necessarily what everyone expected.”

At a time when views about the health and direction of the market are fairly mixed and some issuers are holding out for better pricing, a deal like Credito Emiliano’s is to be welcomed, according to the syndicate official.

Another was also upbeat about the transaction and the wider market in general, noting that the corporate segment was very active today. Credito Emiliano’s deal is a good demonstration of peripheral access, he said, providing a bit of yield via a seven year maturity that had until recently dominated supply.

“It’s all going in the right direction,” he added.

At 180bp over, Credito Emiliano’s OBG is coming some 40bp through Italian government bonds, according to the syndicate official, compared with a much larger discount of around 130bp for the Italian national champions.

“That seems OK, though,” he said. “There’s a requirement for a higher premium as there is still some uncertainty, but it’s gone pretty well.”

The issuer will also have considered a senior unsecured trade, he suggested.

Other possible candidates for issuance this week include Caffil, the successor entity to Dexia Municipal Agency. A syndicate banker at one of the mandated leads – Barclays, BNP Paribas, Deutsche Bank, HSCB and Natixis – said that the issuer yesterday wrapped up some follow-up marketing after a roadshow ended last week, and will assess the feedback and market conditions before deciding on its next steps.