Banco Popular Español paid a double-digit new issue premium on a Eu1bn 10 year cédulas today (Tuesday), thereby ensuring better execution than a CaixaBank benchmark last week, according to bankers, while an Aktia Eu500m seven year was a more straightforward success.

Banco Popular leads BAML, BBVA, Banco Popular, Crédit Agricole and Natixis launched the Eu1bn 10 year cédulas hipotecarias with initial price thoughts of the low 50s, before setting guidance at 50bp-52bp having gathered IOIs of around Eu1bn. The re-offer was set at 50bp on the back of Eu1.25bn orders.

Bankers away from the leads had been surprised when Banco Popular’s mandate was announced yesterday (Monday) afternoon, with the deal coming a week after a Eu1bn 10 year CaixaBank issue fell short of expectations amid wider market weakness, ultimately pricing in line with initial price thoughts and guidance on the back of disappointing demand.

“When I first saw the mandate I thought ‘OK, they can do it, but they will have to pay a price’, and I was right,” said a syndicate official away from the deal. “It is a trade, but it is not massively oversubscribed and they had to pay up.”

The syndicate official estimated the deal offered a new issue premium of 12bp-13bp.

“It shows deals can be done, but the market is very demanding,” he added.

Another syndicate official away from the leads agreed that the deal would have struggled had it not offered a generous premium.

“Spread-wise it is a different animal from last week’s CaixaBank deal,” he said. “It has gone better than that, but not exuberantly.”

Another banker suggested the deal was also helped by the levels it offered versus the Spanish sovereign, seeing CaixaBank’s issue as having come 40bp-45bp through the sovereign and Popular at around 20bp through.

Aktia Bank leads Crédit Agricole, JP Morgan, LBBW and Natixis launched the Eu500m no-grow seven year benchmark with initial price thoughts of the flat to mid-swaps area, tightening to guidance of 3bp through with books over Eu1.25bn. The re-offer was set at minus 4bp with the final book in excess of Eu1.5bn.

“It was a fantastic print and a good result with books of Eu1.5bn,” said a banker away from the deal.

He put fair value for the deal at minus 5bp, noting it offered a pick-up of a few basis points from Nordea Bank Finland’s curve.

“I expect the deal will tighten aggressively on the break to minus 5bp,” he added.

Another syndicate official away from the leads said the trade had gone extremely well, adding that initial price thoughts of the flat to mid-swaps area had appeared generous.

“They have taken some of the icing off the cake at minus 4bp though,” he said. “That is around where we saw fair value.”

Meanwhile, bankers suggested that market activity could slow towards the end of the week, with Easter holidays approaching.

“But there are a few issuers looking at the market, eyeing seven year or 10 year deals,” said a syndicate official. “I think you could expect two or three trades in the next week to 10 days.”

The European Central Bank’s third covered bond purchase programme has meanwhile almost reached the Eu60bn of CBPP1, with Eu59.998bn of settled and outstanding purchases as of Friday, according to figures released yesterday afternoon. The total is up Eu3.051bn on a week earlier.

“This week’s CBPP3 figure is the first number with a full PSPP (public sector purchase programme) week,” said Crédit Agricole analysts. “And despite the larger average daily purchases of the PSPP, the CBPP3 has been going strong as ever.

“We think this supports our view that the Eurosystem will run both programmes in parallel without taking away any focus from the CBPP3.”