Nordea Bank Finland drew Eu4bn of demand for a dual-tranche, 5.25 and 12 year, deal today (Tuesday) that, at Eu2bn, is the largest covered bond issue since November. Meanwhile, Bankia is due with its first benchmark in three years and Coventry Building Society issued a £500m FRN.

Nordea Bank Finland leads BNP Paribas, HSBC, Nordea, NordLB and RBS went out with initial price thoughts of the 6bp through mid-swaps area for the 5.25 year tranche and of the low single-digits area over for the 12 year tranche. The levels were then tightened to guidance of the 8bp through area and the mid-swaps flat area, respectively, before the re-offer levels were set at minus 10bp and minus 2bp. The leads built a total order book of Eu4bn across the two tranches, each of which were sized at Eu1bn.

“You don’t see many two tranches deals,” said a syndicate official at one of the leads. “It just shows how remarkably robust the covered bond market is.”

The total size of Eu2bn makes it the largest benchmark covered bond since Santander launched a Eu3bn deal in November that was split into Eu1.75bn 10 and Eu1.25bn 20 year tranches.

A syndicate official away from the leads suggested the five year tranche was priced flat to the issuer’s curve and, noting that a Nordea 2024 was trading at minus 8bp, bid, suggested the 12 year tranche offered a new issue premium of around 2bp.

“It was a good result all round,” he said.

Another said that both the levels and demand were “really impressive”. He noted that the Nordea 2024 was issued at 1bp over mid-swaps at the end of October, also being the first CBPP3-eligible deal issued after the programme’s start.

“Now they have achieved a negative spread for an even longer bond,” he said.

Another banker meanwhile said that the dual tranche format was “a nice approach”.

Bankia is expected to launch a long 10 year, September 2025, covered bond tomorrow (Wednesday), having mandated Bankia, BBVA, Deutsche Bank, Natixis and Nomura to lead manage the euro denominated deal. The transaction will be the Spanish issuer’s first since Bankia sold a Eu500m two year at 290bp over mid-swaps in February 2012 with a 4% coupon.

A syndicate official at one of the new issue’s leads said that Bankia February 2025s have been trading at 42bp, mid, and April 2022s at 26bp. The last 10 year Spanish benchmark was a Eu1bn Bankinter issue that was priced at 38bp over mid-swaps and that was today quoted at 9bp, while other stronger names were at similar levels, with BBVA February 2025s at 11bp over and CaixaBank February 2025s at 15bp.

“It’s an ‘anything goes’ market,” said a syndicate official away from the latest deals. “Bankia will be as much of a blow-out as can be.

“Is that a good sign or a bad sign? We are getting close to a state of overheating that is hard to bear, but as long as the market is fuelled by such liquidity I don’t see why it should stop.”

Meanwhile, Coventry Building Society launched a £500m (Eu688m) five year FRN today. Leads BNP Paribas, Lloyds, RBC and Santander went out with guidance of the three month Libor plus 30bp-32bp area, before setting the re-offer at plus 30bp and with a final book of £575m.

A syndicate official at one of the leads noted that there were few comparables for the deal, with a DNB Boligkreditt February 2020 issue the only recent five year sterling deal to have been brought to the market – it was priced at 28bp over on 9 February.

“This was a very straightforward trade,” he added.