Hypo Tirol overcame the latest Heta-related headlines to price its first benchmark covered bond after a long wait today (Thursday), attracting over Eu550m of orders for a Eu500m five year issue that a banker at the leads said was a good result.

Hypo Tirol leads Barclays, Deutsche, Erste, LBBW and Société Générale launched the Eu500m no-grow five year issue with guidance of the 45bp over mid-swaps area at 9:45 CET this morning, entering the market after new euro issues from SEB and CM-CIC (see separate article). The deal was then re-offered at 44bp, on the back of orders over Eu500m, before the book closed at over Eu550m comprising over 50 accounts.

A syndicate official at one of the leads said the deal had gone well given renewed headlines regarding potential losses for Heta bondholders.

“Heta is a still a topic that investors are thinking about, and of course that had an effect on how this deal played out,” he said. “When the Heta situation is ultimately resolved there will be a good market for Austrian issuance, but until then it will be a problem for these issuers, especially for the Hypos.

“Given those concerns, this is quite a success for a small and not so familiar issuer.”

The deal is the widest-priced benchmark Austrian covered bond since mid-2013.

The lead syndicate official said fair value for the new issue was around 27bp-28bp. He said this was based on the 21bp over mid-swaps spread at which a Eu500m seven year issue for Raiffeisen-Landesbank Steiermark was priced on 13 January, with the difference accounting for by Hypo Tirol’s weaker credit and lower rating.

The lead syndicate official added that a Eu750m seven year issue from Erste on 12 January was seen as being priced with a premium of around 12bp at its re-offer of 16bp over mid-swaps.

“To price with a comparable premium to Erste, which is a national leader, would be a good result,” he said.

Syndicate officials away from the leads said it is difficult to estimate fair value for the new issue, given that it is rated Aa3, while many outstanding Austrian issues are higher rated.

“But it looks like they played it safe by going generous, and that is entirely sensible,” said one.

Hypo Tirol’s deal had been expected since September, when the issuer held a roadshow ahead of a potential euro-denominated issue. The leads later communicated that the deal would potentially arrive in early 2016, and the issuer then held a global investor call on Monday to update accounts about developments regarding the credit and the Austrian market.

A lead syndicate official said the leads received positive feedback from investors, and had been monitoring the market while waiting for an appropriate window.