Kutxabank opened the primary market today (Monday) with a Eu1bn seven year covered bond, its first euro benchmark since January 2013 and the tightest cédulas of 2014, and Helaba is taking IOIs for a dual tranche deal that is slated for launch tomorrow, with further mandates expected.

Leads BBVA, Commerzbank, Crédit Agricole, HSBC and Nomura opened books this morning for Kutxabank’s transaction with initial price thoughts (IPTs) of the mid-70s, before revising guidance to 70bp-72bp over mid-swaps. A syndicate official at one of the leads said the final book comprised more than Eu1.6bn of orders and over 100 accounts, with the spread being fixed at 70bp over.

“We are pleased with how the trade went, especially given the market backdrop,” he said. “There was very steady growth and solid participation.”

He said that assessing comparables had been a hard task as Kutxabank does not have any covered bonds on this point of the curve – its longest dated is a February 2017 which was this morning at 50bp over. As a result, the leads looked to CaixaBank 2021s and Bonos, which were trading at 69bp over and 110bp-115bp over, respectively, this morning.

“Assuming the curve between three and seven years is worth 20bp-25bp, I would put the new issue premium at close to flat,” he said. “This is particularly impressive given a weak market in which Spanish government bonds widened 5bp-9bp this morning.”

A syndicate official away from the deal noted the widening of Spanish bonds this morning, but that they had since tightened this afternoon, adding that he thought the market in general was “a touch softer today”. The deal comes after peripheral spreads were hit on Thursday afternoon and widened further on Friday.

At 70bp over, the transaction is the tightest cédulas hipotecarias of the year, and the second tightest euro benchmark covered bond from a peripheral issuer after UniCredit SpA priced a Eu500m three year at 57bp over in January. That deal was part of a dual tranche issue alongside a Eu1bn 10 year.

Landesbank Hessen-Thüringen (Helaba) (pictured) announced this afternoon that it has mandated BNP Paribas, Citi, Deutsche Bank, Helaba, HSBC, Société Générale, UBS and UniCredit to lead manage a dual tranche euro benchmark Pfandbrief, that is expected to be tomorrow’s business, according to a syndicate banker at one of the leads. The transaction will comprise three and seven year tranches.

“We are taking indications of interest now,” he said. “We have set IPTs at 7bp through mid-swaps for the three year, and at 3bp over for the seven year.”

At least two further mandates are expected this afternoon, according to syndicate officials.