Kommunalkredit Austria built an order book comprising 105 accounts when it yesterday (Tuesday) sold its first benchmark covered bond since February 2011, a Eu500m no-grow five year deal, and an official at the issuer said it positioned itself well with investors.

Leads BNP Paribas, Deutsche Bank, DZ Bank, Erste Bank and LBBW priced the Fundierte Bankschuldverschreibung at 30bp over mid-swaps on the back of Eu1.2bn of orders.

The deal is the issuer’s first euro benchmark covered bond since February 2011, when it tapped the capital markets for the first time since the Kommunalkredit group was split following nationalisation in the spring of 2009, said Christoph Zoitl, head of treasury at Kommunalkredit Austria.

Non-strategic operations were assigned to what became KA Finanz while Kommunalkredit Austria, the renamed Kommunalkredit Depotbank, took over the group’s strategic operations with the intention of the bank being reprivatised. This was stopped in May 2013, and Kommunalkredit will not carry out new financing activities and instead focus on advisory and consultancy business in the public sector infrastructure business according to the amendment decision of the European Commission from 19 July 2013, noted Zoitl.

He said that the issuer initially planned to also access the benchmark covered bond market in 2012, but decided against such a move because markets were so volatile and because of the offer of funds from the European Central Bank in the form of three year long term refinancing operations (LTROs). It borrowed Eu1.5bn from the ECB’s three year LTROs, and has paid back Eu150m, he said.

The issuer plans to tap the benchmark covered bond market on a regular basis with Eu500m deals, said Zoitl, to refinance redemptions.

An analyst noted that yesterday’s deal came after repayment of a Eu1bn issue last week.

The issuer laid the groundwork for yesterday’s transaction with a one-and-a-half week roadshow that was wrapped up in Barcelona last week, where many market participants were congregated for a major industry gathering, and Zoitl said that the preparation paid off.

“The most important thing for us is that we achieved a granular order book with a broad range of support,” he said. “It was very positive to be able to win over 100 investors and we believe that we were able to position ourselves well.”

The deal was initially marketed at the mid-30s over, with official guidance set in line with this, at the 33bp over area.

A lead syndicate official said that the move from initial price thoughts and guidance to the re-offer spread amounted to a 5bp tightening, and was “impressive”.

The price strategy was mainly based on feedback from investors after a roadshow and in response to the announcement of the mandate, which hit the screens on Monday, according to the syndicate banker. The spread for German and Austrian covered bonds versus their respective sovereigns was also looked at, but was only a minor input, he said.

Germany took 60% of the bonds, Austria 21%, the Nordics 9%, the UK 4%, the Benelux 2%, Italy 2%, Switzerland 1%, and France 1%.

Asset managers were allocated 50%, banks 40%, insurance companies 9%, and others 1%.