Van Lanschot is expected to launch an inaugural conditional pass-through benchmark tomorrow (Tuesday), having publicly mandated for a Eu500m seven year. Meanwhile, Nationwide attracted £1.1bn of orders for a £750m (Eu1.04bn) three year FRN.

F van Lanschot Bankiers, with leads BNP Paribas, Credit Suisse, LBBW, Natixis and Rabobank, announced the mandate for the Eu500m no-grow seven year issue this (Monday) morning, after completing an investor roadshow on Friday. The issue will be the inaugural benchmark from a new Eu5bn conditional pass-through (CPT), registered covered bond programme.

Bankers disagreed on whether the new issue should be priced tighter or wider than a Eu500m April 2022 CPT issue from fellow Dutch issuer NIBC, sold only last Thursday at 1bp over mid-swaps, which was seen at flat to mid-swaps, mid, today.

“It is more or less a copycat of NIBC,” said one banker away from the deal, suggesting the new issue would have to print 2bp or 3bp wider than NIBC because it is a debut.

Another banker away from the leads said he expected Van Lanschot to print a few basis points tighter than NIBC, at around 3bp through mid-swaps, because Van Lanschot’s better credit rating as an issuer would be worth more than any premium the issuer might have to pay.

“NIBC is seen as a tricky credit,” he said. “Van Lanschot has a more bog-standard banking structure, so this should go well.”

However, a syndicate official at one of the leads said he saw fair value as being flat to mid-swaps, and NIBC’s deal.

“If Van Lanschot were a more established issuer, it should print tighter than NIBC,” he said. “Van Lanschot is the better rated credit, and in the senior unsecured market it trades way tighter, with outstandings trading in the 30s, mid, while NIBC’s are in the 100s.

“If I were an investor, on the new issue I would expect there to be some differentiation based on the difference in credits, of around 5bp,” he said. “However, I would also think there should be some premium, again of around 5bp, for this being an inaugural issue. Therefore I think fair value is around flat to NIBC.”

The lead syndicate official also noted that the issuer had considered a five year issue.

“At the moment there is not much difference between five and seven years,” he said. “Seven years remains the sweet spot.”

Nationwide Building Society leads Citi, Nomura, RBC and RBS launched the UK issuer’s £750m three year FRN with initial price thoughts of the three month Libor plus 22bp area, before moving to guidance of the three month Libor plus 20bp-22bp area after having gathered IOIs of over £1bn.

The re-offer was set at 20bp over, with the leads building a final order book of around £1.1bn.

“They’ve printed at the tight end of the range, so that is good news,” said a syndicate official away from the deal. “It looks like a healthy transaction.”

He added that the issuer had achieved significantly tighter funding than it would have been able to in euros.

“If you’re a non-Eurozone issuer it makes sense to be in that market in the three years,” he said.

Nationwide on 18 March sold a Eu750m 12 year issue, with its most recent sterling benchmark being another £750m three year FRN, priced in July 2014.

Meanwhile, Berlin Hyp is the only issuer publicly in the pipeline, with a debut green covered bond expected to be launched next week after an ongoing European roadshow, but bankers said more primary market activity is likely this week.

“The market is in good shape, and there is a good mood in this part of the financial world,” said a syndicate official. “People are used to the endless Greek saga, and the market has not reacted to the outcome of the Finnish elections. That indicates how the market is going.”

Another banker suggested that a core issuer is looking at the market ahead of a possible 10 year deal, to be launched this week.