Yorkshire Building Society is planning to sell its first euro covered bond since 2010, and an official at the issuer said it wants to tap the market before it goes into blackout at the end of June, with the timing of a deal depending on the need for investor work and market conditions.

The building society announced its plans for a euro fixed rate issue yesterday (Wednesday). Danske Bank, DZ Bank, JP Morgan and Natixis have the mandate.

In gearing up for a covered bond benchmark the UK institution is delivering on what Chris Parrish, group treasurer at Yorkshire Building Society, previously told The Covered Bond Report was a plan to turn to the asset class after completing a senior unsecured transaction, which it did in March. (See feature article “UK returns & rewards: A question of time” for more.)

Parrish this (Thursday) morning told The CBR that the timing of the covered bond mandate is driven in part by a desire to tap the market before the issuer goes into blackout, expected to be from 30 June, ahead of its half-year results.

“It’s either go now or wait until after July and then you’re into the summer holidays, so it felt like we should do it before we go into blackout,” he said.

The timing of a deal itself, meanwhile, will be driven by feedback from investors about the desire for calls or meetings with the issuer, added Parrish.

“We did quite a lot of investor work in connection with our senior unsecured transaction and feel that we have covered the majority of investors, but we are waiting for feedback from investors and have had some requests for one-on-one telephone conferences, for example,” he said.

Yorkshire met with some 70 investors in connection with the senior unsecured deal in March, and a further 30 accounts since then, according to Parrish.

The issuer last tapped the euro benchmark covered bond market in September 2010, when it priced a Eu600m five year. Its last benchmark covered bond in any currency was a £500m (Eu614m) four year floating rate note in March 2012.

Reduced wholesale funding needs have kept a lid on UK benchmark FIG supply in recent years, and only one UK euro covered bond has been sold so far this year, a Eu1bn seven year for Lloyds Bank that was priced at 15bp over mid-swaps on 9 April.

A syndicate official away from the Yorkshire mandate suggested pricing in the mid-20s over for a five year euro covered bond from the issuer, and the mid-30s for a seven year, with a tighter spread possible if the trade is small.

Yorkshire’s Eu600m September 2010 issue is trading at around 6bp over, according to the syndicate banker, while comparables such as Eu1bn Abbey National Treasury Services November 2020s and Lloyds’ April 2021s are quoted at 16bp/13bp over and 13bp/10bp over, respectively.

Yorkshire’s covered bonds are rated Aa1 by Moody’s and AA+ by Fitch.