Van Lanschot attracted over Eu1bn for a Eu500m seven year CPT issue today (Tuesday) that bankers said was a successful result for the rare Dutch issuer, especially given “sombre” market sentiment after terror attacks in Brussels, while at least one peripheral deal was said to have been postponed.

Bankers noted that the market reaction to events in Brussels was limited, with European equities down 0.5% this morning but soon recovering, with equities and credit indices unchanged from yesterday’s close by the early afternoon.

“Overall, the markets have been resilient to these horrible events,” said one. “There is some disruption, of course, but the market has not been derailed.”

F van Lanschot Bankiers had announced a mandate for the Eu500m no-grow seven year conditional pass-through (CPT) covered bond yesterday (Monday) morning, after having completed a European roadshow on Friday, and leads ING, JP Morgan, LBBW, Natixis and Rabobank opened books for the deal at 9:00 CET this morning with guidance of the 22bp over mid-swaps area.

A syndicate official at one of the leads said Van Lanschot and its leads had decided to press ahead after having receiving encouraging feedback.

“Of course we took note of the tragic events in Brussels, but the initial reaction from the markets and the IOIs we received yesterday were still pointing us in the direction that this deal could be done, and we still felt comfortable,” he said.

The leads then revised guidance to the 20bp area, plus or minus 2bp, on the back of over Eu750m of orders, communicating that the books may close at short notice.

“We wanted to accelerate the process as more bad news came out of Brussels to account for possible further volatility, and so that the accounts already in the book did not become uncomfortable,” said the lead syndicate official.

At 10:00 the spread was then fixed at 18bp on the back of over Eu900m of orders, before the book closed at 10:30 at over Eu1bn with around 50 accounts.

“In the end it is a very successful trade on an unfortunate day,” said the lead syndicate official. “We took a high quality book, welcoming new friends as well as old ones.”

“With this deal we also see the conditional pass-through community further grow, with a couple of relevant, well-received deals from the Netherlands, which show investors are OK with these deals and that things are moving in the right direction.”

Syndicate officials away from the leads agreed that the deal had gone well.

“It is not too surprising that this was a success – it is after all a Eu500m no-grow from a core issuer, and people seem comfortable with the CPT structure,” said one. “But given the overall sombre market environment it is a good result.”

Syndicate officials at and away from the leads said the deal offered a new issue premium of around 5bp-6bp based on the mid side of Van Lanschot’s curve, seeing its April 2022s quoted at 11bp-12bp, mid, and also citing fellow Dutch issuer NIBC’s April 2019s at 6bp and April 2022s at 9bp.

“I think they could have gotten away with starting a bit more aggressively,” said a syndicate official away from the leads. “I’m not sure they needed to pay any more than 4bp premium, but given that this is only their second deal and the disturbance in the market this morning, it is understandable that they were a touch more cautious.”

The deal is the Dutch issuer’s second benchmark covered bond, following its debut in April of last year, a Eu500m seven year that attracted Eu1.4bn of orders and was priced at 1bp over mid-swaps.

Bankers said that one peripheral issuer had been expected to enter the euro covered bond market today, and suggested the deal had likely been postponed as a result of the events in Brussels. Some syndicate officials said other issuers had also been monitoring conditions, but had decided against launching new issues.

“It was a different story for Van Lanschot given they had already announced and marketed their deal,” said a syndicate official. “If you had been looking for the right window, and your deal was not expected, it would probably have been a sensible approach to hold back today.”

Another syndicate official said postponed deals could emerge tomorrow should current market conditions hold.

“We will have to see where we are at the open,” he said, “but aside from this event risk conditions are generally supportive for more covered bonds, so markets permitting I think we could see more before the Easter break.”

The CBPP3 portfolio grew Eu1.809bn last week, with purchases up slightly from the previous week’s Eu1.705bn and remaining in line with the pace of purchases in recent weeks.

Figures released yesterday (Monday) afternoon show that settled and outstanding purchases under the third covered bond purchase programme increased from Eu161.601bn to Eu163.41bn in the week to last Friday.

Analysts estimated that the ECB bought around Eu1bn of last week’s total on the primary market. Assuming no maturities, this implies average daily secondary market purchases of around Eu161bn, down from an average of around Eu240m-Eu260m in the previous week.