Banco Sabadell waited for a “a good moment” to print a Eu1bn five year issue yesterday (Tuesday) and found market conditions supportive after an ECB meeting last week, an official at the issuer said, with bankers suggesting the 1.5 times oversubscribed deal benefited from subsequent relative value moves.

Sabadell’s new issue, its second benchmark of the year after a Eu750m five year issue in May, was the only benchmark covered bond brought to market yesterday, with no further deals emerging as the market awaits the conclusion of an FOMC meeting today (Wednesday).

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 book closing at around Eu1.5bn, with over 80 accounts.

Bankers highlighted the size of the order book and said Banco Sabadell’s deal was the best from a peripheral issuer in recent weeks, after peripheral issues last week found less demand, with Eu750m transactions from Banco Santander Totta, Banca Carige, UBI Banca and Banca MPS only modestly oversubscribed.

“We were monitoring the market very closely and after the introductory statement of the ECB last Thursday we considered the market to be in a very good shape,” said Marc Hernández-Sanz, head of funding at Banco Sabadell. “Also, we followed what had happened before in previous issues, but we were confident that this one would be successful and the result in the end is very good, printing Eu1bn at 48bp over mid-swaps.

“This was our second covered bond in 2015 and the last one of the year, and investors wanted to participate,” he added. “The market likes the name of Banco Sabadell.”

Central banks and official institutions were allocated 42% of the deal, fund managers 35%, insurance companies and pension funds 13%, banks and private banks 4%, and others 6%. Accounts from Spain took 28%, Germany and Austria 25%, the Benelux 11%, the Nordics 7%, Italy 7%, France 5%, the UK 3%, other Europe 11%, and others 3%.

Hernández-Sanz added that another reason the deal received strong demand is that the yield was attractive in terms of relative value versus the Spanish sovereign. Syndicate officials saw the deal as offering a pick-up of around 12bp over Bonos.

Maureen Schuller, head of covered bond strategy at ING, noted that Spanish sovereign bonds on average outperformed swaps by 6bp after Thursday’s ECB meeting raised expectations that the Eurosystem’s quantitative easing programme would be extended, while covered bond spreads seemed to be responding sluggishly, with covered bonds from southern European jurisdictions widening versus swaps.

Hernández-Sanz added that Sabadell had been in a blackout period until Friday of last week, and said the bank had planned to issue a benchmark deal in the last quarter of the year.

“After we left our blackout we checked the market and we saw that it would be a good moment to do the deal on Tuesday,” he said, “and in the end it was a good day.”

Hernández-Sanz added that with the new issue Sabadell had met its funding target for 2015.