Banca MPS offered the widest spread of the year in euro benchmark covered bonds with its second CPT issue today (Thursday), pricing a Eu1bn 10 year at 127bp over mid-swaps and paying a 65bp pick-up versus the Italian sovereign for a deal that bankers said was a good result for the credit.

The new issue is the widest priced euro benchmark since Banca Monte dei Paschi di Siena (MPS) priced a Eu1bn July 2024 issue at 148bp over mid-swaps in July 2014.

After Banca MPS announced its mandate yesterday (Wednesday) afternoon, leads Banca MPS, Barclays, Commerzbank, Société Générale and UBS launched the 10 year deal with guidance of the 130bp over mid-swaps area, before the deal was priced at 127bp with the book closing at over Eu1.4bn.

“It was nicely timed, and for a difficult name a Eu1bn deal with a Eu1.4bn book is not a bad takeaway at all,” said a syndicate official away from the leads.

Syndicate officials away from the leads said the deal offered a premium of around 25bp, seeing Banca MPS 2024s at 95bp, mid. They said the deal also offered a 63bp-64bp pick up versus the sovereign, with the underlying BTP at around 65bp.

“It is a very interesting spread, so it is not a surprise that they got good demand,” said a syndicate official at one of the leads. “But that premium versus secondaries is not so far from what other peripheral credits have paid in recent weeks, and in this market you have to pay up for duration.”

The new issue is Banca MPS’s second since the Italian issuer gained bondholder consent to convert its covered bond programme to a CPT format in June. The first CPT issue from Banca MPS came on 20 October, when it sold a Eu750m long six year.