UniCredit will next week embark on a European roadshow for a potential first conditional pass-through deal, it said yesterday (Wednesday), which would make it only the second benchmark CPT issuer, while Bank Austria plans to return twice in 2015 after setting a post-crisis Austrian tight.

UniCredit’s move comes after an official at the issuer disclosed its CPT plans to The CBR in November as it amended an existing covered bond programme to the structure.

Investor meetings will begin on Monday, with Banca IMI, Credit Suisse, Natixis, RBS and Société Générale arranging the roadshow alongside UniCredit itself.

NIBC Bank of the Netherlands launched the first benchmark conditional pass-through (CPT) covered bond, in October 2013, and followed it up with a second in April 2014 – both were Eu500m five year deals.

Bankers away from UniCredit’s leads said that while some investors will still need to be sold on the format, the success of NIBC’s trades should support UniCredit’s CPT obbligazioni bancarie garantite (OBG) programme.

“NIBC did good work and the format is now more accepted, which should mean there is more interest for this trade,” said a syndicate official. “Investors can see NIBC’s CPT trades are performing in line with other covered bonds.”

Another syndicate official noted that many investors are not yet fully comfortable with the structure, saying that UniCredit will need to do a good job of educating investors on the roadshow.

“But I think it will be a great trade, and will go extremely well,” he said, adding that he thought the CPTs would come wider than UniCredit’s other covered bonds, “but not materially wider”.

A banker said he expects more issuers to adopt the structure, with Dutch and Italian issuers being the most likely candidates.

“UniCredit can hardly go wrong,” he added. “Despite the sovereign risk, they are still a tier one name in Italy.

“The market needs time to develop, but it’s good to see another issuer.”

UniCredit Bank Austria yesterday (Wednesday) priced a Eu500m 10 year mortgage Pfandbrief at 3bp over mid-swaps, making it one of the tightest ever Austrian benchmarks.

Leads BNP Paribas, Deutsche Bank, ING, LBBW and UniCredit opened with IPTs of the mid-to-high single digits over mid-swaps, tightening guidance to 5bp before setting the re-offer at 3bp, and built a final order book of over Eu1.4bn and 83 accounts.

Banks took 48% of the deal, funds and asset managers 30%, central banks and official institutions 18%, and insurance companies 4%. Investors in Germany were allocated 52%, Austria 25%, Asia 6%, the UK 5%, France 3%, Switzerland 3%, the Benelux 1.5%, Italy 1.5%, and elsewhere 3%.

“Everything went smoothly, pricing-wise but also timing wise and with respect to the interest we saw in the trade, our first in 2015,” said Gabriele Wiebogen, head of long term funding at UniCredit Bank Austria.

The new issue premium of around 4bp on offer at the IPTs stage was in line with the recent trend, a syndicate official at one of the leads said, noting that an estimated final NIP of around 2bp was at the tighter end of what has been seen in recent trades. The deal was this (Thursday) morning trading at 1bp over, mid, he added.

“It was a textbook trade,” he said.

Wiebogen said the issuer was satisfied with the levels achieved, noting that aside from being one of the tightest Austrian benchmark covered bonds since the onset of the financial crisis – with a Kommunalkredit Austria five year having been priced at 3bp through mid-swaps in 2006 – the trade was also the tightest priced 10 year of 2015 from any jurisdiction.

This was achieved against a backdrop in which some Austrian banks have suffered because of exposure to the Swiss franc and to Russia and related markets. However, Wiebogen said such issues had no impact on the deal.

“We had a careful look at the geopolitical situation, in particular the situation in Greece” she added, “but the covered bond market is not really affected.”

Bank Austria opted to issue shortly after exiting its blackout period to launch on the back of positive results, Wiebogen said, while the maturity this year of some of the issuer’s outstanding benchmarks was also a factor.

“We were confident the market was there and investors are interested in buying, and we decided after Karnival it was just the right time for us to come to the market,” she said.

Bank Austria has been one of the more prolific Austrian covered bond issuers lately, having sold four benchmarks in 2014, and Wiebogen added that the issuer has two more covered bonds in the pipeline for 2015.