NIBC priced a new conditional pass-through covered bond today (Thursday), a Eu500m seven year issue, ahead of an expected inaugural CPT deal from fellow Dutch issuer Van Lanschot, with syndicate officials gauging the extent to which its structure may have been a factor in pricing.

NIBC’s deal is its third conditional pass-through (CPT) covered bond, its last having been a Eu500m five year issue in April 2014, which was also the most recent covered bond issue from a Dutch issuer. It was the only issuer of benchmark legislative CPT covered bonds until February, when Italy’s UniCredit debuted with a Eu1bn 10 year deal.

NIBC leads Commerzbank, Crédit Agricole, ING, NIBC and RBS launched the new Eu500m no-grow seven year deal with initial price thoughts of the low single-digits over mid-swaps area, before moving to guidance of the 2bp area. The re-offer was set at 1bp on the back of Eu1.1bn of orders.

A syndicate official away from the leads suggested the deal offered a slight premium, which he said may have been required because of the issue’s CPT structure.

“A lot of investors are still not so familiar with the structure, although more and more are becoming comfortable with it,” he added.

Another banker away from the deal said the pricing of the deal reflected the difference between NIBC and other Dutch names, suggesting the deal has come around 8bp wider than a theoretical new issue from ING or ABN Amro, but said it was difficult to tell whether this was down to the CPT structure or NIBC being a slightly weaker credit.

“It is an academic question at the moment,” he said. “Right now the market has no eye for these details.”

A syndicate official at one of the leads said he believed the premium to be in line with what it would have been had the bond not had a CPT structure. Seeing NIBC’s April 2019 paper trading at minus 7bp, bid, the lead syndicate official put fair value for the new issue at minus 3bp, suggesting the deal offered a premium of 4bp.

“This premium is in line with the market average,” he said. “Investors do seem to be comfortable with the structure.”

F van Lanschot Bankiers is expected to launch an inaugural benchmark covered bond from a new Eu5bn CPT programme next week, having been on a roadshow with BNP Paribas, Credit Suisse, LBBW, Natixis and Rabobank to promote the programme from last Friday (10 April) to tomorrow.

A syndicate official at one of Van Lanschot’s leads said he believed its expected deal should print inside NIBC’s new issue, depending on which tenor the issuer opts for, because Van Lanschot is perceived as a better credit.

However, a syndicate official away from the leads suggested Van Lanschot’s new issue should be priced slightly wider than NIBC’s taking into account that Van Lanschot is debuting.