Leeds Building Society impressed with a Eu500m four year debut euro covered bond benchmark this (Thursday) morning, attracting Eu1.3bn of demand for the issue at a limited pick-up to UK secondaries and in spite of ongoing Brexit concerns.

After a roadshow for the UK issuer’s first euro-denominated benchmark, leads Danske, HSBC, Natixis and UBS went out with guidance of the 30bp over mid-swaps area this morning, then fixed the re-offer spread at 27bp over mid-swaps when the books exceeded Eu1bn, with demand ultimately reaching some Eu1.3bn.

Bankers at and away from the leads put the premium to outstanding UK issuance at 5bp-6bp. A syndicate official away from the leads saw more established and larger UK names at around 20bp-22bp over mid-swaps in the four year part of the curve.

“With such an inaugural trade you would expect new issue premiums to be higher, but it doesn’t look like they have paid up here,” he said, noting that the premium over secondaries was roughly the same as that paid by Lloyds on Monday of last week (4 April) for a Eu1.25bn five year.

“For an inaugural trade, that’s pretty impressive,” he said, also noting the Eu1.3bn book. “Demand for non-Eurozone names is pretty strong, particularly given where peripherals are trading, but it also shows that they did a good job preparing the deal.”

A syndicate official at one of the leads called it a “fantastic trade”.

“We knew from the roadshow that many investors are discussing Brexit,” he said, “but they indicated they were happy to engage given the high quality of the name, the reasonable tenor, and that there is a spread to other jurisdictions to reflect this. But even then, I was a bit surprised at how well it went.”

He said that the leads went out with guidance of the 30bp area rather than initial price thoughts given that the market had opened strongly and they wanted to get investors to commit to the trade, with Leeds meanwhile not being interested in trying to squeeze the price given that the deal is its inaugural euro benchmark.