ABN Amro priced a Eu1.5bn 10 year covered bond yesterday (Thursday), paying a new issue premium similar to that paid by issuers when the market was first reopened this year and mindful of taking an investor-friendly approach to reaching final pricing, said an official at the issuer.

The deal is first Dutch benchmark covered bond of the year, and ABN Amro’s first since late August. It goes toward refinancing a Eu2bn issue maturing in July, Daniëlle Boerendans, head of secured funding at ABN Amro Bank, told The Covered Bond Report.

Leads ABN Amro, BNP Paribas, Commerzbank, Deutsche Bank and Société Générale priced the Eu1.5bn 10 year issue at 34bp over mid-swaps, after guidance of the 35bp over area and initial price thoughts (IPTs) of the mid to high 30s over.

Just over Eu2bn of orders were placed by more than 100 accounts.

“We’re really happy with the result,” said Boerendans. “The market has been a bit softer since the beginning of the week, but with the tone improving on Wednesday morning we decided to go ahead, aided by the lack of competing supply.”

The issuer deliberately sat out the first wave of covered bond issuance this year, with the market feeling too crowded and the ability balance size and spread limited, she said. Instead, ABN Amro was active in senior unsecured both in private placements and a Yankee tap.

Some syndicate officials away from the deal said that the leads took a defensive approach to pricing, with one putting the new issue premium, at least based on IPTs, at around 8bp. A lead syndicate official put the concession at 5bp-6bp.

Boerendans said that the issuer took advice to adopt an investor-friendly approach when it came to the pricing.

“Some issuers have tightened the spread quite a bit from IPTs and that hasn’t been appreciated by investors, the leads told us,” she said. “I see the NIP at 4bp-5bp, which still leaves room for performance in the aftermarket.”

The ABN Amro deal was the sixth 10 year benchmark covered bond since the market reopened last Tuesday (7 January), and Boerendans said that the maturity was the most obvious one for ABN, with a well-populated redemption profile not leaving the issuer many options.

Germany and Austria took 60%, the Benelux 15%, the UK 7%, France 6%, Asia 3%, Italy and Spain 3%, the Nordics 3%, Switzerland 1%, and others 2%.

Banks were allocated 47%, fund managers 33%, insurance companies and pension funds 11%, central banks 4%, and others 5%.