A Eu3bn dual tranche, 10s and 20s, cédulas from Santander today (Wednesday) is believed to be the longest and largest euro benchmark since the onset of the financial crisis and was launched on the back of a Eu3.75bn book. Meanwhile, ANZ sold a Eu1bn five year benchmark.

Leads Barclays, Natixis, Nomura and Santander launched the transaction this morning, initially announcing benchmark-sized trades in both the 10 and 20 year maturities, with guidance of the 25bp over mid-swaps area and 45bp area, respectively.

Pricing has been fixed at 23bp and 43bp, respectively, for Eu1.75bn 10 year and Eu1.25bn 20 year issues, on the back of a Eu3.75bn book, which a lead syndicate official said was slightly skewed towards the 10 year maturity. He described it as “a gangbusters of a trade”.

“We haven’t seen this kind of duration for a long time,” he said, “never mind this kind of size.”

The longest previous euro benchmarks since the onset of the financial crisis have been 15 year deals, according to the syndicate official. Meanwhile, Santander itself had not launched a euro benchmark since January of last year, when it issued a Eu2bn five year.

The syndicate official said that Santander had been keen to enfranchise its investor base with the new trade and to do so in the deepest part of the market, i.e. 10 years, while also offering insurance companies and other long dated investors longer dated supply of which they have been “starved”. The 20 year tranche achieved the now rare 2% yield threshold.

A banker away from the leads said that both the dual tranche structure and 20 year 2% deal were smart ideas, building on, for example, good interest from insurance companies that had been witnessed on a UBI Banca 10 year benchmark last week.

Another syndicate official away from the leads noted that, unlike recent peripheral supply, Santander’s 10 year piece had not come through the issuer’s secondary curve. However, he said that this may have been related to the size that Santander was taking out of the market.

The lead syndicate official said that on an i-spread basis Santander 2026s were at around 21bp, mid, while BBVA 2024s were in the high teens and 2025s in the low 20s. He said that the pick-up over the 10s offered by the 20s was based on a steep curve between 10s and 20s evident for names like Bankia, and also based on investor feedback, and the bankers away from the leads said that the 20bp pick-up appeared reasonable.

Another syndicate banker away from the leads said that he would reserve judgement on the trade, suggesting that Eu3bn was a large amount for Santander to take out relative to a Eu3.75bn book size. He said that depending on how much had been bought under CBPP3, Santander may have taken out between 60% and 75% of demand from other investors by sizing its deal at Eu3bn, which may have meant that investors received more bonds than they were expecting. He said that secondary market performance would give clues to this, noting that a Eu1.25bn seven year Banco Sabadell transaction launched on 31 October at 25bp was bid at 29bp over today.

Distribution statistics including central bank allocations that might offer clues to Eurosystem central bank buying under CBPP3 were not yet available, said the lead syndicate official.

ANZ announced the mandate for its benchmark yesterday (Tuesday) morning and leads ANZ, Barclays, BNP Paribas and UBS went out with initial price thoughts of the 4bp over mid-swaps area for a five year deal this morning. Guidance of the 2bp area followed, with the pricing ultimately fixed at 1bp over and size at Eu1bn on the back of a Eu1.4bn book.

Syndicate officials away from the leads said that although the deal had gone well, it showed the significant difference in demand between Eurozone issues and those that are not eligible for CBPP3 and are less favourably treated in some EU regulation. One said that it shows such deals are “much more challenging”, although he said that ANZ had nevertheless achieved a “decent” result.

Another said that the pricing of 1bp over for the five year compared favourably for the issuer with a re-offer spread of 7bp over achieved by Commonwealth Bank of Australia on a Eu1bn seven year three weeks ago, which was the last Australian euro benchmark and was said to be at around 6bp over today.