Bankia attracted over Eu2.8bn of orders for its first cédulas benchmark in over three years today (Wednesday), with bankers attributing much of the deal’s success to the QE-powered backdrop. Meanwhile, DKB has mandated a Eu500m 12 year Pfandbrief and Aareal a $500m four year.

Bankia, BBVA, Deutsche, Natixis and Nomura launched the Eu1bn September 2025 trade with initial price thoughts of the high 40s over mid-swaps, then moved to guidance of the 45bp area. They then set the re-offer at 42bp after building a final order book of Eu2.87bn comprised of 110 accounts.

“It was a very good result,” said a syndicate official at one of the leads.

Syndicate officials away from the deal agreed. One suggested that the high 40s was a generous starting point, but said it made sense.

“We have seen that in the peripherals you need to start with wide IPTs to encourage people in,” he said.

Noting that Bankia February 2025 paper was trading at 41bp, mid, the lead syndicate official put fair value for the new issue at 43bp and suggested the new deal came flat to or slightly inside the issuer’s curve, and a banker away from the leads said that while it was possible to see fair value slightly tighter, the new issue premium was nonetheless “minimal”.

The deal was the Spanish issuer’s first since it sold a Eu500m two year at 290bp over mid-swaps in February 2012.

“We had over 100 investors happy to play,” added the lead syndicate official. “We all know the headlines surrounding some Spanish banks, so that is really good to see.”

Bankers away from the leads said that the transaction was symptomatic of the wider market, with one noting that the European Stability Mechanism (ESM) attracted Eu9bn of demand for a Eu3bn 2.5 year deal at a negative yield yesterday.

“Anything with a pick-up is appreciated,” he said.

The spread of 42bp over is the highest on a euro benchmark covered bond since 20 January when Caixa Geral de Depósitos issued a Eu1bn seven year at 64bp over mid-swaps.

A syndicate official said that the renewed rally in government debt and other SSA paper had made covered bonds even more attractive from a relative value perspective, noting that 10 year Spanish government bonds have rallied from above 1.65% in mid-February to around 1.22%.

“What we are seeing is the full-blown effects of QE if names like Bankia can come to market and get this tight pricing and level of demand,” said another. “If someone says that there was anything smart about the trade, I would have to disagree.

“Without the support of the central bank we would not see these deals getting done anything like this.”

Deutsche Kreditbank is set to tap the euro market tomorrow (Thursday), having mandated BayernLB, Commerzbank, DZ, Natixis and NordLB as leads for a Eu500m no-grow 12 year mortgage Pfandbrief. Its last benchmark was a Eu500m 10 year priced in June 2014 that had a then-record low coupon of 1.625%.

And Aareal Bank is set to enter the dollar market with a $500m no-grow four year Reg S mortgage Pfandbrief via Citi, Credit Suisse, Goldman Sachs and LBBW. It is following in the footsteps of Landesbank Baden-Württemberg, which issued a $500m three year Pfandbrief at 27bp over mid-swaps on 26 February.