Raiffeisenlandesbank Oberösterreich built one of the biggest books for an Austrian covered bond today (Tuesday), attracting over Eu2bn of demand for an inaugural, Eu500m no-grow 10 year benchmark that was deemed reflective of better sentiment towards the country and ongoing market dynamics.

The Eu2bn-plus book, comprising some 140 accounts, puts the deal ahead of a book of almost Eu2bn achieved by Erste with a Eu500m 10 year in January 2015 – the last time an Austrian issuer encountered demand of a similar magnitude.

“It’s quite an achievement both in terms of book size and the number of orders,” said the lead syndicate banker. “It is one of the strongest books seen for an Austrian deal.”

The ongoing supply/demand imbalance in covered bonds – with RLB OÖ’s euro benchmark being only the second since the start of last week – was among factors cited as boosting demand, but the syndicate banker said that the positive spread available as well as better sentiment towards Austrian names were also key.

“The Heta story is still around,” he said, “but it is not as relevant.”

RLB OÖ’s deal is the first Austrian benchmark since Bawag PSK sold a Eu500m six year in February and comes after a deal was subsequently reached between Heta – the bad bank of Hypo Alpe-Adria-Bank – and its creditors.

After a roadshow, leads BNP Paribas, DZ, Erste, LBBW and RBI yesterday (Monday) afternoon announced the Fundierte Bankschuldverschreibungen issue for launch today, and this morning went out with initial price thoughts of the mid-swaps plus 15bp area. After taking Eu1.5bn of orders they moved to guidance of 12bp plus or minus 2bp, will price within range, and ultimately re-offered the bonds at 10bp over.

Syndicate bankers at the leads said that a spread of 9bp over would even have been possible, although possibly unwise. One said that the 15bp area starting point may have appeared generous, but that the market was flat to slightly wider this morning.

They said that calculating the new issue premium was difficult because outstanding Austrian covered bonds are squeezed and because of the debut nature of RLB OÖ’s issue, but put it at 2bp-3bp, while some bankers away from the leads put it at around 3bp-4bp, saying that the pricing appeared fair and that the deal had gone very well.

Bankers’ only lament was that the deal was another 10 year – with the exception of an ANZ NZ Eu1bn seven year benchmark last Tuesday, all post-summer euro supply has been in 10 years or longer.

“Investors have been telling us: please show us something a bit shorter,” said one.

One of the lead syndicate bankers said that the 10 year maturity had been the issuer’s clear preference.

“We would have preferred a seven year,” he added, “also on the back of the very successful ANZ.”

Imminent follow-on supply was deemed unlikely, with the market focusing on Bank of Japan and FOMC announcements due tomorrow and little in the immediate pipeline.

“I don’t know how much the meetings should affect the European market,” said a syndicate banker, “but the door seems fairly open for covered.”