Spain’s Cajas Rurales Unidas will price a Eu750m five year cédulas today (Thursday) on the back of more than Eu1bn of orders that allowed a 5bp tightening from IPTs, while Australia’s Westpac has opened books for a 10 year domestic covered bond.

Cajas Rurales Unidas (CRU) is the entity that resulted from a merger of Cajamar and Ruralcaja in November last year, and together with 18 other co-operative banks forms the largest co-operative banking group in Spain, Grupo Cooperativo Cajas Rurales Unidas (Cajamar Group).

The issuer made its covered bond debut as the restructured Cajamar in early May, and announced the mandate for its second benchmark yesterday (Wednesday) afternoon.

Leads Crédit Agricole, Nomura, Santander and Société Générale built an order book in excess of Eu1bn for a Eu750m five year mortgage backed issue that they will price at 270p over mid-swaps, according to a banker at one of the leads. That is the middle of guidance of the 270bp over area, which followed initial price thoughts of the 275bp over area.

CRU’s May transaction was a Eu500m three year cédulas hipotecarias that came at 290bp over, and was yesterday said to be trading at around 225bp over.

Syndicate bankers away from the leads expected the new issue it to go well given investors’ search for yield, with one also seeing the issue as offering good value compared with where other comparable Spanish supply would come.

“There’s a decent bid for anything with a bit of a spread,” said a syndicate official, with another also noting that peripheral supply offers investors “some juice”.

He said that at 270bp over, CRU’s cédulas issue was coming around 100bp wide of Spanish government bonds.

The last new issue in covered bonds to offer a spread in the vicinity of that on CRU’s deal was a Eu750m five year obbligazioni bancarie garantite (OBG) issue for Italy’s Banca Carige on 17 October, which was priced at 270bp over.

Recent euro benchmark supply, in contrast, has been at much tighter, double-digit, spreads, save for a Bank of Ireland Mortgage Bank issue. SpareBank 1 Boligkreditt priced a Eu1bn long six year deal at 15bp over on Tuesday, although it is said to have not been fully subscribed by end investor demand. (See separate story for more.)

Standard & Poor’s assigned a BBB- rating to CRU’s mortgage covered bonds yesterday. They are also rated by DBRS (BBB (High)), Fitch (BBB+), and Moody’s (Ba2).

Spreads on CRU’s covered bonds widened after they were downgraded to sub-investment grade by Moody’s in July, but they have since retraced. An analyst said the three year issue from May initially widened to around 400bp, but is well inside re-offer now.

Westpac Banking Corporation is out with a 10 year domestic Australian covered bond that is being marketed at the 85bp over BBSW area, with Westpac as sole lead manager.

The deal is the second domestic issue this year, after a A$700m 10 year for ANZ Banking Group in August that was priced at 100bp over. Kangaroos from Royal Bank of Canada and Canadian Imperial Bank of Commerce comprise the remainder of Australian dollar covered bond supply in 2013.