UniCredit Bank Austria priced a Eu500m mortgage Pfandbrief yesterday (Monday) to tick off the second of three benchmark covered bonds it is targeting for launch this year, with the next one also likely to be a mortgage-backed deal, according to an official at the bank.

Almost Eu1bn of orders were placed for the deal, a Eu500m no-grow featuring a five-and-a-half year maturity. Leads BayernLB, DZ Bank, ING, Nykredit Markets and UniCredit priced the transaction at 23bp over mid-swaps, the tight end of guidance of the 25bp over area that followed initial price thoughts of the mid to high 20s over.

Gabrielle Wiebogen, head of funding at UniCredit Bank Austria, said that the issuer is satisfied with the level of oversubscription and the granularity of the order book in particular.

“Ninety accounts for a Eu500m deal is positive,” she said.

The deal was one of two covered bonds in the market yesterday – a Eu500m five year for Finland’s Aktia Bank being the other – with new issuance conditions said to be supportive for covered bonds but the wider market slightly weaker.

“There was a degree of softening to be observed,” said Wiebogen. “We went out with the wider spread initially to check investor interest and generate demand.

“I think 23bp over is fair value for both sides, and the deal was this morning at 22bp over mid, which is a good development.”

A syndicate banker at one of the leads put the new issue premium at around 2bp-3bp.

Wiebogen noted that Austrian and German accounts took the majority of the bonds, but that the issuer had also focussed on attracting demand from investors in the Nordic region and the Benelux, and succeeded in doing so.

Germany took 54%, Austria 12%, Benelux 11%, Nordics 10%, Italy 6%, Spain 3%, Asia 2%, and Switzerland 2%.

Banks were allocated 55%, funds and asset managers 30%, insurance companies 9%, and central banks 6%.

The transaction is Bank Austria’s second benchmark Pfandbrief this year, coming after a Eu500m 10 year mortgage-backed issue on 13 January, with Wiebogen noting that the issuer is planning to raise Eu4bn in total in 2014, across three benchmark covered bonds and a senior unsecured issue as well as private placements and retail funding.

After the UniCredit group released its 2013 full year results on 11 March UniCredit Bank Austria went on a two week roadshow, and the issuer was keen to follow-up on these moves with a deal, said Wiebogen.

“We went for a mortgage Pfandbrief because we had more collateral available in the cover pool than in the public sector pool, and most likely our third covered bond will also be a mortgage issue,” she added.

The five-and-a-half year maturity was the best fit for the issuer’s maturity profile, with the issuer having an opening for a redemption in the second half of 2019, and had also met with positive feedback from investors during the roadshow, according to Wiebogen.

The deal comes after a set of rating actions by Moody’s on the issuer’s mortgage Pfandbriefe, which were upgraded from Aa1 to Aaa on 12 March following a change to its methodology, but then cut to Aa1 on 24 March due to a rating action on the issuer’s parent company, UniCredit SpA. The rating was kept on review for downgrade, and confirmed at Aa1 yesterday.

Wiebogen said that after a short-lived triple-A rating the covered bonds are back at the rating on the basis of which the bank has been issuing.

“It didn’t bring any change for us, and it also wasn’t a problem for investors,” she said.