OP Mortgage Bank attracted some Eu1.75bn of demand for a Eu1.25bn five year covered bond at a limited NIP today (Monday), with the strength of the deal surprising some market participants after the terrorist attacks in Paris. More supply, including a Deutsche cédulas, is expected this week.

Some syndicate officials said Friday’s attacks and the potential for an adverse market reaction had given them pause for thought this morning, with one saying that at least one potential deal announcement was delayed as a result. However, OP’s deal and wider market sentiment showed that the events to have had little market impact.

“OP is as strong a deal as we have seen in a long time,” said a syndicate official away from the leads. “We were quite surprised that anyone would go ahead so early given the events in Paris.

“But although things didn’t look particularly good at the open, credit indices are tighter and equities are fine. It is a good thing that the attacks haven’t affected the market.”

A syndicate official at one of OP’s leads described the market’s reaction as sober and said that although the potential impact of Friday’s attacks had been discussed this morning before the deal was green-lighted – after it was mandated last week – the leads were confident that they could proceed.

“I felt from the start that in spite of the brutal events markets would not be affected to any large extent,” he said, “and this turned out to be the case.”

Leads Crédit Agricole, DZ, LBBW and Pohjola went out with guidance of the 8bp over mid-swaps area for the five year benchmark and within an hour had built books of over Eu1bn. Guidance was revised to the 6bp area plus/minus 1bp with the books over Eu1.5bn and the issue was re-offered at 5bp over with the books over Eu1.75bn pre-reconciliation.

“This is just what the market needs,” said a banker away from the leads. “Low risk, five year, Euribor plus spread, and with the comfort of the purchase programme. There is no real risk in buying this.

“But with the re-offer of plus 5bp I don’t think it is priced to perform immediately,” he added.

Bankers at and away from the leads put the new issue premium at up to 5bp, with one syndicate official away from the leads citing OP March 2021s at 1bp-2bp over.

“This new five year is slightly shorter, so at 5bp it offers about 5p of NIP versus the mid,” he said.

The lead syndicate banker said that, with the benefit of hindsight, initial guidance could have been set at the 7bp area, but that the move to 5bp was “fluid”.

“To be fair, not everyone accepted 5bp,” he added, “but the vast majority did.”

A debut public cédulas hipotecarias issue from Deutsche Bank SAE is expected tomorrow (Tuesday) after the issuer followed up a roadshow by announcing a mandate for a five year issue today, and further supply is expected this week. A new mandate could be announced this afternoon, according to a syndicate official, with a German issuer possibly coming this week, and Caisse Centrale Desjardins de Québec is expected later in the week after it finished a roadshow and once it has updated programme documentation following the announcement of third quarter results on Friday.

“It was nice to have the market to ourselves today,” said OP’s lead syndicate banker.

Aegon Bank last Friday mandated ABN Amro, Rabobank, RBS, SG and UniCredit for a roadshow this Wednesday to Friday ahead of an inaugural issue off its new conditional pass-through programme.