Bank of Ireland sold the longest dated post-crisis Irish covered bond yesterday (Wednesday), a Eu500m seven year ACS that a lead syndicate banker said “had everything” and is trading 10bp through Irish government bonds after having been priced flat to the curve.

Leads Citi, Danske Bank, Deutsche Bank, Nomura and RBS priced the Bank of Ireland Mortgage Bank asset covered security (ACS) at 195bp over mid-swaps on the back of some Eu2.3bn of orders. The deal was capped at Eu500m from the outset.

They had initially pitched the trade at 200bp-210bp over, a level that some syndicate bankers away from the leads said was unnecessarily wide, before moving to official guidance of the 200bp over area.

A syndicate banker on the deal said that the initial price thoughts range, at 10bp, was slightly larger than is typically the case in the covered bond market, but less so in spread percentage terms.

“We got to where we wanted, and framed the initial price thoughts around the feedback we received and to encompass as much of that as we felt was appropriate,” he said.

At 195bp over, the deal was seen as priced flat to Irish government bonds by syndicate bankers on and away from the transaction. According to a lead syndicate banker this makes it the second tightest Irish covered bond in terms of the spread versus the sovereign, with a Eu500m five year Bank of Ireland ACS in March having come slightly through government bonds.

Another lead syndicate official said that the bonds are trading 10bp through the sovereign today, and that many market participants would not have thought it possible for Irish covered bonds to be in such a spread relationship to Irish government bonds.

“It was an awesome trade,” he said, adding that although the deal was heavily oversubscribed many investors are still not able to invest in Irish covered bonds. The result of Bank of Ireland’s trade, despite the issuer not having “full access to European investors” is encouraging, he said.

Around 160 accounts are said to have participated in the transaction. Germany and Austria were allocated 35%, the UK 33%, the Nordics 7%, the Netherlands 7%, southern Europe 7%, Switzerland 5%, France 4%, and others 2%.

Asset managers took 56%, pension funds and insurance companies 26%, banks and private banks 17%, and others 1%.