Van Lanschot sold a second, conditional pass-through benchmark covered bond yesterday (Tuesday), with the deal attracting new investors and showing substantial real money interest in the CPT structure, according to a funding official at the Dutch bank.

F van Lanschot Bankiers made its benchmark covered bond debut in April of last year, when it sold a Eu500m seven year that attracted Eu1.4bn of orders and was priced at 1bp over mid-swaps. Like fellow Dutch issuer NIBC, Van Lanschot opted to use a conditional pass-through (CPT) structure for its issuance.

Van Lanschot’s second issue had been expected after it held a roadshow last week and announced a mandate for a Eu500m no-grow seven year issue on Monday morning.

The new issue was then launched yesterday morning as news emerged of terrorist attacks in Brussels, and although the market impact was limited, bankers noted that other deals across markets were postponed.

“Obviously it was a very sad day yesterday,” said Ralf van Betteraij, manager treasury funding management at Van Lanschot. “We were preparing for the go/no go call early in the morning when the news came out of Brussels.

“In that kind of situation you have to judge as an issuer with your leads how to proceed with the process, and on the basis of the feedback we received during the roadshow and also on Monday, we were very confident to go ahead.”

Van Betteraij added that feedback from the roadshow suggested yesterday was the best time to launch the deal in the coming weeks, given upcoming holidays across key jurisdictions over the Easter period.

“What we learned is that pre-Easter there is only this window,” he said. “After Easter, major covered bond jurisdictions are on holiday, and that is also what we heard on the roadshow last week.

“So despite the horrible terrorist attacks we launched the deal at 9:00 CET, and the book built very, very swiftly.”

Leads ING, JP Morgan, LBBW, Natixis and Rabobank launched the deal with guidance of the 22bp over mid-swaps area, before revising 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. At 10:00 the deal was then re-offered at 18bp on the back of over Eu900m of orders, before the book closed at 10:30 at over Eu1bn with 50 accounts.

Official institutions were allocated 23% of the deal, central banks 22%, fund managers 22%, banks 18%, and insurance companies and pension funds 15%. Accounts from the Benelux took 41%, Germany and Austria 32%, the Nordics 14%, southern Europe 4%, the UK and Ireland 4%, Asia 2%, Switzerland 2%, and others 1%.

Van Betteraij noted that a number of accounts were present in the book that had not participated in the issuer’s debut.

“That was one of the strong points of the book,” he said. “The distribution was strong – there was very limited participation post-allocations of the ECB, and it also shows substantial real money interest in the CPT product.

“We’d done a very successful inaugural transaction last year, and we’ve done some credit updates and credit work with investors that were new to Van Lanschot or were not ready to invest in the CPT instrument last year. You can see also that our investment and credit work is paying off.”

Syndicate officials away from the deal said it was encouraging that the price had been tightened by 4bp through the process, which, they added, was at the upper end of spread moves in recent core issues.

Van Betteraij said the spread movement was well-supported by the quality of the order book.

“We view this as not being too aggressive,” he added. “We are happy with the outcome and it also leaves a good new issue premium for investors.”

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.