Bankia launched the first peripheral euro benchmark covered bond of the year today (Tuesday), attracting orders of over Eu1.1bn for a Eu1bn five year cédulas, and bankers said the result would encourage further peripheral supply, with Deutsche Bank SAE expected to hit the market tomorrow.

The Spanish bank’s new issue is the first benchmark covered bond from a peripheral issuer since a Eu1.25bn 10 year for Intesa Sanpaolo on 9 December, which was the last euro benchmark of 2015.

After markets last week got off to a soft start on the first trading days of this year and the covered bond market was reopened by core names, syndicate officials had suggested peripheral issuers would wait for more stable conditions.

Leads Bankia, BNP Paribas, Deutsche, Santander and UBS launched Bankia’s five year cédulas hipotecarias with guidance of the mid-to-high 60s over mid-swaps. The deal was then re-offered at 65bp and the size set at Eu1bn. The book closed at over Eu1.1bn.

“For me, this has been one of the more successful Eurozone covereds since the market reopened,” said a syndicate official at one of the leads. “If you look at many of the CBPP3-eligible deals subscription levels have been modest, and I think this looks a better deal than some of the last ones.”

“With Bankia being a higher spread name, this really attracted investors’ interest.”

The lead syndicate official said fair value for the new issue was in the low 50s over mid-swaps, based on Bankia’s secondary curve. Another syndicate official said the deal offered a pick up of 10bp-15bp versus the Spanish sovereign.

Deutsche Bank SAE this afternoon announced a mandate for a seven year cédulas hipotecarias, with leads Banca IMI, BBVA, Crédit Agricole, Deutsche and ING. The deal will be brought to market tomorrow (Wednesday), according to a syndicate official at one of the leads.

The Spanish issuer sold its debut benchmark cédulas, a Eu1bn five year issue, on 17 November.

Syndicate officials said Bankia’s result would likely encourage other peripheral issuers to tap the market.

“With a relatively limited concession, compared to what might have been expected, it’s the deal peripheral issuers needed to see, and it’s a good start,” said one.

Bankia’s issue came after Banco Bilbao Vizcaya Argentaria (BBVA) launched the first euro senior unsecured benchmark of the year yesterday, a Eu1bn five year at 85bp over mid-swaps, 10bp inside IPTs and with a new issue premium of around 10bp, on the back of a Eu2.4bn book.