An inaugural, Eu1bn long seven year benchmark OBG for Cariparma today (Wednesday) overcame disaffection with recent new issues to attract non-CBPP3 demand that constituted more than 70% of a Eu1.25bn order book.

The mandate for a roadshow for the Italian bank was announced on Monday of last week (24 November) after deals in the previous two weeks had shown a declining trend in participation from end investors and the Eurosystem taking correspondingly larger shares for CBPP3.

However, after completing a roadshow for its inaugural benchmark covered bonds, Cariparma yesterday (Tuesday) announced a deal mandate, with launch scheduled for today.

Leads Banca IMI, Erste, LBBW, NordLB, UniCredit and Cariparma parent Crédit Agricole went out with guidance of 25bp-30bp over mid-swaps this morning, stating that the pricing would be in that range, and after less than 45 minutes set guidance at 25bp over.

When books were closed orders totalled Eu1.25bn, allowing the issuer to size the issue at the upper end of a targeted Eu750m-Eu1bn size range, according to a syndicate official at one of the leads. He said that more than 70% of demand was from the private sector, i.e. away from the Eurosystem. Provisional allocation figures put central bank placement at around one-third.

“That is one of the lowest of transactions in the last two to three weeks,” said the lead syndicate official.

He added that the order book also included more than 60 orders from the private sector – double the lows seen in recent benchmark covered bonds. German investors are said to have comprised the largest part of the book in terms of number of accounts, with percentage distribution by country balanced between Germany, France and Italy.

Syndicate officials away from the leads said that the deal appeared to have gone well.

“Doing a roadshow, getting investor feedback, and going out with a fair level seems to have worked for them,” said one. “They had decent oversubscription, even if they were not overrun with orders, and it was certainly better than some recent deals.”

The lead syndicate official said that they dispensed with initial price thoughts and went out with the 25bp-30bp will price inside range guidance to make it clear what was being targeted, and a banker away from the leads said that it was the right approach.

“If they had started with the 30bp area, I am not sure that they would have got down to 25bp,” he said, “while we are no longer in the environment where you can tighten more than 5bp from IPTs to re-offer. And ultimately 25bp is a good result.

“The book of Eu1.25bn is a very nice achievement for an inaugural transaction in this period,” he added.

He said the 25bp re-offer compared with a bid level of 26bp over for a Eu750m seven year Credit Emiliano (Credem) issue that was priced at 25bp over on 30 October. The lead syndicate official put Credem’s level at 24bp-25bp over, but either way Cariparma came with no new issue premium given its two month longer maturity.

“The issuer can be very happy with this trade,” said the lead syndicate official.

He noted that Cariparma’s transaction was also larger than Credem’s and said that while the order book was modest compared with Credem’s near-Eu3bn book, order inflation had as good as disappeared since the early days of CBPP3.