Caja Rural de Navarra generated a three times covered book for a Eu500m no-grow seven year cédulas hipotecarias this (Tuesday) morning, with demand for peripheral credits in an undersupplied market helping drive spreads tighter. Meanwhile, Swedbank has mandated.

Having announced the mandate for the deal yesterday (Monday) afternoon, leads BBVA, Crédit Agricole, DZ, HSBC and Banco Cooperativo Español (no books) went out with initial price thoughts of the 20bp area for the Eu500m no-grow this morning. On the back of more than Eu1.25bn of IOIs, guidance was then set at the 17bp area, plus or minus 3bp, before the deal was priced at 14bp over on the back of a Eu1.5bn order book.

A banker away from the leads said that the IPTs looked “very, very cheap” and a lead syndicate official said that while interest in the deal was high after it was announced yesterday, some of the feedback showed “quite some price sensitivity”, explaining why the IPTs had a 20 handle, “even if we were confident we would end up in the mid-teens”, he added. He noted that some larger, high quality accounts tend to be those that are more price sensitive and that some investors had dropped out during execution this morning, but said most remained including good quality names. Eurosystem participation was provisionally described as “the usual”.

The lead syndicate official acknowledged that the move of some 6bp from IPTs to re-offer was a touch greater than moves of up to 5bp more commonly seen on recent deals, and said that the guidance had been indicated with the “plus or minus 3bp” qualifier to make the magnitude of the potential move clear to investors.

He put fair value at 10bp or slightly wider, implying a new issue premium of around 3bp, which was in line with that seen by some bankers away from the leads. The lead syndicate official said that outstanding 2018 Caja Rural de Navarra paper was trading at mid-swaps flat, as was a Bankinter 2018, while Bankinter has a 2025 that was trading at 14bp over. Assuming the two credits trade roughly in line, this led to the fair value estimate, he said.

“The no-grow obviously helped,” said the lead syndicate official, “and there is lots of interest in anything with a pick-up. Coming towards the higher end in terms of spread and duration, this offered the best of both worlds.”

A banker away from the leads described it as “overall a very good result”.

“Peripherals are very well bid and all the recent deals have gone very well and tightened significantly,” he said. “This offered pretty good value at 14bp and coupled with the small size and price tension on the back of CBPP3 it clearly appealed to investors.”

The bankers noted the performance of transactions such as a Eu1bn seven year Intesa Sanpaolo deal priced at 25bp over mid-swaps on 14 January and which is now trading at around 2bp over.

“So we have come a long way since then,” said one.

Meanwhile, Swedbank Hypotek (Mortgage) has mandated banks for a seven year euro benchmark that is expected to hit the market tomorrow (Wednesday). The Swedish issuer has mandated BNP Paribas, Danske, LBBW, Swedbank and UBS.

The deal will be the first Swedish benchmark since November, when Stadshypotek sold a Eu1.25bn seven year issue at 2bp through mid-swaps, which has been trading at around 6bp through. Swedbank’s last euro benchmark was a Eu1bn seven year deal in May 2014.