Sabadell built a Eu1.5bn book for a Eu1bn five year issue today (Tuesday) that bankers said is the best peripheral deal of recent weeks, citing strong demand and a relatively low new issue premium. Goldman Sachs is meanwhile in the market with a collateralised instrument involving Sumitomo Mitsui.

Banco Sabadell’s new issue followed a wave of peripheral deals that found substantially less demand last week, with Eu750m issues from Banco Santander Totta, UBI Banca and Banca MPS attracting books of around Eu800m. A Eu500m five year Banca Carige issue on Monday of last week (19 October) was also only marginally subscribed.

Leads Banco Sabadell, Commerzbank, Goldman Sachs, Lloyds Bank and Société Générale launched the Spanish bank’s Eu1bn five year cédulas hipotecarias with initial price thoughts of the 50bp over mid-swaps area, before moving to guidance of the 48bp-50bp area on the back of Eu1.25bn of IOIs. The re-offer was then set at 48bp with the books closing at around Eu1.5bn.

“From the outside, it looks as though this deal has gone very well and the books in particular look strong,” said a syndicate official away from the leads.

Another syndicate official agreed.

“It certainly is much better than the peripheral deals we’ve seen recently, and, looking at those books, it is the first for a while that hasn’t needed the Eurosystem order to get over the line,” he said.

Syndicate officials said that, while concessions remain elevated relative to earlier in the year, the deal offered a smaller new issue premium than recent peripheral trades. They said fair value for the new issue was around 35bp, seeing Sabadell’s June 2020s quoted at around 35bp, bid, and its November 2021s at around 45bp. They noted that most deals from the periphery in the last few weeks were seen as offering premiums nearer to 20bp.

“If you look at recent comparable deals, that kind of premium is very good for a Spanish name,” said one. “And of course, they were able to tighten from IPTs, something that not all issuers have been able to do.”

Syndicate officials said Sabadell’s result would be encouraging for other peripheral issuers but noted that most Spanish names remain in blackout periods this week, adding that overall benchmark supply would likely be modest this week with many other jurisdictions also in silent periods.

“Things have quietened down naturally with issuers in blackout,” said one, “but I would expect activity to pick up again next week.”

The deal is Sabadell’s second euro benchmark of the year, with the Spanish bank having sold a Eu750m five year issue in May.

Goldman Sachs is in the market today with a collateralised instrument from SumitG Guaranteed Secured Obligation Issuer DAC, which involves RMBS in its collateral and has a joint and several guarantee from the Goldman Sachs Group and Sumitomo Mitsui Trust Bank. It comes after the US bank previously worked with the Japanese on a similar deal, FIGSCO (“fixed income global structured global obligations”), that did not ultimately emerge in the public markets.

Leads BNP Paribas, Crédit Agricole, Goldman Sachs, Natixis, NCB Capital and UBS this morning launched the benchmark-sized US dollar five year soft bullet 144A SumitG issue with initial price thoughts of the 90bp over mid-swaps area.

The deal is expected to be rated Aa2 by Moody’s and AA+ by S&P.