Van Lanschot sold an inaugural, CPT benchmark covered bond today (Tuesday), a Eu500m seven year issue that attracted Eu1.4bn of orders at a level flat to where NIBC priced a similar deal last Thursday. Meanwhile, UniCredit Czech & Slovakia has mandated for a sub-benchmark.

F van Lanschot Bankiers leads BNP Paribas, Credit Suisse, LBBW, Natixis and Rabobank launched the Dutch bank’s Eu500m no-grow seven year conditional pass-through issue with initial price thoughts of the 5bp over mid-swaps area, before moving to guidance of 3bp after having gathered Eu1bn of IOIs. The re-offer was then set at 1bp on the back of Eu1.3bn of orders, before the books were closed at Eu1.4bn, with 73 accounts participating.

“We are very pleased with this inaugural result,” said a syndicate official at one of the leads.

The deal followed a Eu500m April 2022 CPT issue sold by fellow Dutch issuer NIBC only last Thursday at 1bp over, which was today seen at flat to mid-swaps, mid.

The lead syndicate official noted that Van Lanschot’s final order book was larger than that achieved in NIBC’s trade, where orders were in excess of Eu1.1bn from around 60 accounts.

“That is a very good achievement for an inaugural trade, considering that it comes a week after NIBC and it is the same size, the same tenor, the same structure and from the same country,” he said.

A syndicate official at another of the leads said that a level of around flat to mid-swaps and NIBC’s deal was an appropriate target for Van Lanschot even if it is perceived as a better credit given that the new issue was a debut and therefore required a premium.

A banker away from the deal agreed.

“It seems it didn’t matter that Van Lanschot is the better rated credit,” he said. “With a debut you have to pay that bit more.”

However, another syndicate official away from the leads said the starting point of 5bp over mid-swaps seemed cautious.

“If they had started at, say, 3bp, I think they could have printed this tighter and still built an order book of around the same size,” he said. “Maybe they had different feedback, but I don’t think there was any need to pay up so much.”

“But then for a rare name, a small name, this is still a good result,” he added.

Another syndicate official away from the leads said the IPTs were generous, adding that they were surprised the new issue had not printed tighter.

“We definitely expected it to print inside NIBC,” he said, “but I’m sure the leads knew what they were doing. From an outsider’s point of view these levels are a little surprising, but the leads had the benefit of investor feedback from the roadshow.”

One of the lead syndicate officials disagreed that the starting point was cautious, stating that it was difficult to compare a debut deal with a third CPT issue from NIBC, a more established issuer.

“This approach and this outcome is great for all involved,” he said. “The reality is that with an inaugural transaction you need to make sure the deal is a success so the bank can become a frequent issuer.

“With this deal we have set them down that road.”

UniCredit Bank Czech Republic & Slovakia is expected to issue a sub-benchmark euro denominated five year covered bond, having announced a mandate with leads UniCredit and RBI.

The issuer sold its first international covered bond off an EMTN programme in December 2013, a Eu800m five year deal under Czech legislation.

The first benchmark-style euro covered bond from the Czech Republic was a Eu500m five year deal sold by Raiffeisenbank a.s. in October 2014, half of which was retained.

Meanwhile, bankers predicted a quieter covered bond primary market this week, noting that many issuers had met their funding needs or had entered blackout periods, but said that some names were looking at the market.

“I thought there would be more supply announced this week than there has been,” said a syndicate official. “The market feels supportive and there is no real reason for issuers not to go for it.”