ABN Amro got timing right when it yesterday (Tuesday) launched a Eu1.5bn 15 year covered bond that exceeded expectations, according to an official at the issuer, who said accommodating swap rates allowed the Dutch bank to reach a different investor base.

The rare 15 year issue arrived on a busy day in the covered bond market but stood out because of its tenor, with four other issuers launching five to six year deals. Syndicate officials away from the deal identified the Dutch issue as the day’s biggest success, with the leads having built books approaching Eu2bn after many recent deals were only marginally oversubscribed.

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 deal offered a 1.5% coupon.

“The deal went better than expected,” said Daniëlle Boerendans, head of long term funding and capital issuance at ABN Amro Bank.

She said ABN Amro had been looking at issuing a longer dated deal for some time, for asset-liability management reasons, but after launching a debut AT1 deal last week had waited to issue until after a much anticipated Federal Reserve announcement on interest rates last Thursday for stability at the longer end.

The issuer and leads then decided to proceed when the swap rates looked attractive and the markets were in reasonable shape yesterday morning.

“We wanted to target the 1.5% coupon, as we know that is a minimum for some investors,” said Boerendans. “We looked at the 15 year swap rates and we could have waited another day or two for more stability, but I think in the end the timing was perfect because when we announced the transaction the 15 year swap rate was around 1.40%, whereas later in the day it dropped by around 8bp.

“It turned out to be good timing.”

Boerendans said that the issuer felt comfortable to execute the deal in spite of concerns about oversupply in the covered bond market, as most of the trades launched since the market’s reopening at the end of August had been in the shorter end.

“The 10 versus 15 year deals have a different investor base, and while some 10 year trades have struggled we have only seen one 15 year trade this year, so the expectation was that there would be a lot of appetite for this kind of deal,” she added.

“We did not test investors, but we knew the demand would be there given that a lot of insurance companies have appetite for longer dated paper, and given that if you look at the levels of OATs, Bunds and Dutch government paper this deal would give a nice pick-up for investors.”

Some 72 accounts were in the order book, with asset managers allocated 42%, central banks and official institutions 30%, insurers and pension funds 21%, and banks 7%. Accounts in Germany, Austria and Switzerland took 49%, the Benelux 32%, France 7%, the UK 5%, Asia 4%, and the Nordics 3%.

“We are very happy with that order book,” said Boerendans.

The new issue only the second 15 year euro benchmark covered bond of the year, following a WL Bank Eu500m issue in January.