ABN Amro sold a rare 15 year covered bond today (Tuesday), drawing Eu1.9bn of demand for a Eu1.5bn deal in a result bankers said demonstrated to issuers that, as heavy supply is ongoing in shorter maturities, there are options at the longer end of the curve.

ABN Amro’s new issue is only the second 15 year euro benchmark covered bond of the year, following a WL Bank Eu500m issue in January.

Leads ABN Amro, BNP Paribas, Credit Suisse, Deutsche and LBBW priced the Eu1.5bn 15 year deal at 20bp over mid-swaps, with the spread maintained from IPTs of the 20bp area. The books closed at Eu1.9bn.

A syndicate official at one of the leads said the spread could have been tightened, but that the issuer opted to print a larger volume.

“At this level and with that book, the Eu1.5bn size was on the table, so we took that and it is a great result,” he said.

The lead syndicate official said the new issue premium was difficult to calculate as there are no comparables from the Netherlands in the same part of the curve.

“From a yield perspective and references to longer dated government bonds, 20bp is the right number.”

The lead syndicate official said that ABN Amro had opted for the maturity as it fit its internal profile, and added that the current yield environment was supportive for a deal in the longer end.

“There has been some volatility in the rates, but this morning it felt like the right level for getting this done,” he said.

Syndicate officials away from the leads said the deal was the market’s biggest success of the day, while four other issuers launched five or six year deals. They said ABN Amro’s issue was likely boosted by the issuer’s scarcity value, with its last euro benchmark a Eu1.5bn 10 year in January 2014, as well as the rarity of the tenor.

“It was a bold move for them to announce an intra-day execution this morning when there was quite a lot of supply already expected, but they were protected from that to an extent by the pretty generous spread talk,” added one.

Syndicate officials away from the leads differed on the exact size of the concession but agreed the deal offered an attractive pick-up versus the issuer’s secondary curve, seeing its January 2024s trading in the high single digits.

“At these levels they are also offering a 1.5% coupon, which looks attractive,” said another syndicate official.

With some noting that they had recently received indications from real money investors that there is appetite for 15 year paper, syndicate officials said other issuers might now follow ABN Amro in tapping the longer end of the curve.

“The other deals today have shown that fives can work well if the price is right, and I think the seven to 10 area is more congested, but further out into the long end you’re going for a different investor base,” said one.

“This impressive outcome should serve as a signal to other issuers that there are options beyond five year trades.”