Spain’s Banco Popular Español priced a Eu1bn five-and-a-half year covered bond yesterday (Tuesday), with an official at the issuer noting an “overwhelming” level of oversubscription in an already crowded market as BayernLB and NIBC also launched benchmarks.

Leads Banco Popular Español (BPE), Citi, Deutsche Bank, Morgan Stanley, Santander and UBS built an order book in excess of Eu2.25bn for the cédulas and priced it at 115bp over mid-swaps, the tight end of guidance of 115bp-120bp over. The deal is BPE’s first euro benchmark since it issued a Eu750m four year at 240bp over mid-swaps in September.

Santiago Armada, head of funding at BPE, said the deal met the issuer’s aims for the transaction, although he noted that when the books were opened there was a “shy showing” before orders started coming in.

“Investors were shy at the beginning and I think there was a little bit of price discovery going on, but right after we were overwhelmed by the size and quality of investors that showed interest” he told The Covered Bond Report. “We were pleased with the final pricing of 115bp as it offers investors a small premium over secondary market.”

Armada said that the decision to come to market yesterday was not one that been planned far in advance, but rather that BPE felt that there were attractive funding levels to be had and that cédulas were being well received by investors.

“We felt there was strong appetite for cédulas, so we decided to bring this deal ahead of plan,” he said. “We have confirmed the interest, especially internationally, with only 15.7% of investment coming from Spain.”

Distribution of BPE’s September deal was strongly weighted towards Spain, with 40% of the cédulas bought by domestic accounts.

“This was a solid transaction with big accounts in size, but also a very granular with high quality orders,” said Armada of yesterday’s deal. “The 72% asset managers and 15% Insurance distribution is the best indication.

“It went impressively well compared to our last deal and the level of demand shows how positive it all is.”

BPE intends to issue two benchmark covered bonds in 2014 according to Armada.

“We will probably return to market again this year, but not until the second half, with a deal sized between Eu500m and Eu1bn,” he said.