Banco Sabadell on Friday launched the third CBPP3 eligible benchmark since the programme began, a Eu1.25bn seven year cédulas hipotecarias priced at 25bp over mid-swaps, which added peripheral supply after Credito Emiliano the day before and was increased at a late stage.

The bank had announced results the previous (Thursday) morning and, according to a banker at one of the leads, was keen to build on Credem’s momentum to come with a similar deal. It went out with the same IPTs as had its Italian counterpart, the 30bp area, and after having generated over Eu2bn of indications of interest, leads Barclays, Commerzbank, JP Morgan, Lloyds and Sabadell set guidance at the mid-swaps plus 27bp area. The deal was then priced at 25bp over on the back of some Eu3bn of demand.

The size was increased from Eu1bn to Eu1.25bn after the lower amount had initially been flagged as the final size, with the issuer reportedly explaining its move by citing the strength of demand, according to the lead banker. He said that before doing so the leads checked with compliance that this was OK and then made sure that investors had sufficient time to revise their orders should they have wished to do so – even if this prolonged the whole execution process.

“Given the size of the book pricing at anything but 25bp was out of the question,” he added.

He nevertheless said that a spread of 24bp was considered, but that the issuer wanted to leave something on the table for investors. He said the bond was quoted at 25bp/23.5bp today.

A banker away from the leads said that he thought that Sabadell might have been able to come even slightly tighter, but suggested that the higher size explained the final re-offer.

The 25bp re-offer compared with levels of 11bp over, mid, for a Sabadell January 2017 and 17bp for a January 2018 the day before launch, said the lead banker. He said that after the Credem deal market participants had come to realise that credit curves for such names are flatter than they had thought.

Spanish media on Friday reported that an order placed via the Bank of Spain for CBPP3 buying was Eu700m, citing sources at Banco Sabadell. A Banco Sabadell spokesperson declined to comment on the figure.

According to the lead banker, buying under CBPP3 was classified under “other” in the geographical breakdown of the deal’s distribution – this came in at an unusually high 30%, which was higher than the 27% total given for central banks and official institutions given in the breakdown by investor type.

Otherwise, asset managers were allocated 47%, banks 16%, insurance companies and pension funds 6%, other 4%, while Germany and Austria took 30%, Spain 9%, France 8%, the UK and Ireland 6%, Netherlands 5%, Nordics 4%, Switzerland 4%, and Italy 4%.